Witnesses at a House of Lords hearing said stablecoins are unlikely to become mainstream money, describing them mainly as gateways into crypto rather than a future payments standard.
The comments were made during a public session of the Lords’ Financial Services Regulation Committee examining how stablecoins should be regulated in the UK and their implications for banking and financial stability.
Financial Times economics commentator Chris Giles said stablecoins were largely “on- and off-ramps” to crypto and “not massively interesting,” arguing that without clear legal backing they remain risky for households to hold as money.
Giles said sterling stablecoins were unlikely to disrupt UK banks domestically, given the country already has instant, low-cost payments, though he accepted they could improve efficiency in cross-border and large corporate transactions.
He backed the Bank of England’s approach to regulating stablecoins “like money,” with strict reserve rules, resolution plans and a liquidity backstop to guard against rapid runs.
US law professor Arthur E. Wilmarth Jr. told the committee stablecoins were not a natural part of the financial system and said tokenised deposits would be a safer alternative.
Wilmarth criticised the US GENIUS Act as a “disastrous mistake” for allowing non-banks into “the money business,” while praising the UK for pursuing a tougher and more bank-like regulatory framework.