The United Kingdom’s House of Lords heard critical views on stablecoins Wednesday, with witnesses claiming that tokens were mainly “on- and off-ramps into crypto,” rather than the future of money.
The House of Lords held a public session as part of its new inquiry into how stablecoins should be regulated in the country, gathering evidence on their role in payments, banking and financial stability.
The Financial Services Regulation Committee (FSRC) grilled witnesses on stablecoins’ competition with banks, cross‑border use, illicit finance risks and their treatment under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
They heard contrasting views from Financial Times economics commentator Chris Giles and US law professor Arthur E. Wilmarth Jr.
Stablecoins mainly “on- and off-ramps” to crypto
Giles told the committee that stablecoins had not yet taken off in the UK because there was still no “clear legal underpinning and clear regulation,” making it risky for households to hold them as money.
He said that, assuming a robust regime were put in place, the main opportunities would be making transactions and payments “more efficient, cheaper, potentially faster than currently,” especially in cross‑border and large corporate transfers.
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Domestically, Giles was skeptical that sterling stablecoins could meaningfully disintermediate banks, given already instant, low‑cost payments.
He said their current use was mostly “on- and off- ramps” to crypto for an “intrinsically worthless asset,” and “not massively interesting or going to take over the world.”
Interest, regulation and “new suitcases of cash”
On interest, Giles noted that whether stablecoins should pay yield went to the heart of their purpose and the structure of the UK’s financial system.
If they functioned purely as a payments technology, he said, “there’s no need to pay interest,” and concerns about disintermediating deposit funding were limited because interest‑bearing current accounts already existed and had not “taken over the whole of our financial system.”
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He welcomed the Bank of England’s shift toward regulating stablecoins “like money,” with strict backing rules, resolution plans, and an ultimate liquidity backstop in the case of a “very rapid run.”
At the same time, he warned stablecoins were attractive for illicit use, saying they had been described as “your new suitcases of cash” and arguing that international oversight of exchanges and stronger Know Your Customer (KYC) and Anti Money Laundering (AML) checks would be essential if they moved beyond their current niche.
GENIUS Act a “disastrous mistake”
Wilmarth told the Committee he did not regard stablecoins as “a natural component of the financial system,” arguing that tokenized deposits could do a better job.
He called the GENIUS Act a “terrible” and “disastrous mistake” for allowing non‑banks to issue dollar‑denominated stablecoins.
He described them as a form of “regulatory arbitrage” that let lightly regulated firms enter into “the money business” while undermining a prudential framework that has been built up “over centuries within the banking system.”
He added that he had a “hard time agreeing with anything in the bill,” and that the US had made “many unfortunate choices,” but that the Bank of England was proposing a more robust regime.
Related: UK finance watchdog nears final consultation step on key crypto rules
