Coinbase policy exec urges UK regulators to drop proposed Bank of England stablecoin caps in Lords hearing

Coinbase Vice President for International Policy Tom Duff Gordon told the House of Lords Financial Services Regulation Committee on Wednesday that the details of the UK’s stablecoin rulebook will determine whether London remains a world-leading financial centre over the next decade.

Contributing to the committee’s inquiry into stablecoin regulation, Duff Gordon warned that the gap between government ambition and proposed rules is “too wide,” and argued the UK risks becoming “a bit of a laggard” unless regulators provide clearer, more workable requirements.

A central focus of Duff Gordon’s evidence was the Bank of England’s proposed temporary holding limits for so-called “systemic” sterling stablecoins: £20,000 ($26,740) for individuals and £10 million ($13.4 million) for businesses. He said those caps would prevent sterling stablecoins from reaching the scale needed to operate as serious settlement infrastructure for tokenized capital markets activity.

Under the Bank of England’s proposed framework, the regime would apply only to sterling-denominated stablecoins designated as systemic by HM Treasury and used at scale in UK payments. In those cases, the Bank of England would oversee prudential and financial stability risks, while the Financial Conduct Authority would supervise conduct and consumer protection. The framework would not apply to non-sterling stablecoins or those primarily used for crypto trading, such as USDT and USDC, which would remain under the FCA’s existing oversight.

“A ten million pound cap on business holdings sounds significant until you consider the scale at which capital markets actually operate,” Duff Gordon said in prepared remarks shared with The Block ahead of the hearing. “If sterling stablecoins cannot be held at meaningful scale, they cannot function as settlement infrastructure for tokenized gilts and bonds. The risk is that the caps, however well-intentioned, prevent sterling stablecoins from ever reaching the point where they are genuinely useful.”

Five asks for the UK’s stablecoin framework

During the committee hearing, Duff Gordon described 2026 as “vital for the UK” and framed stablecoins as a technology that can reshape payments and settlement. He said stablecoins can move money “almost instantaneously and almost for no cost” across borders. He argued they can also reduce costs and speed settlement for domestic merchant payments compared with card rails, which he described as still expensive even after interchange fee caps.

Additionally, he said stablecoins could play a role in the settlement of tokenized real-world assets, arguing that if assets move onto blockchain rails, then the cash leg also needs to be tokenized, whether via central bank digital currency, tokenized deposits, or stablecoins. Duff Gordon said UK stablecoins could also “boost the role of sterling,” given that most stablecoins are dollar-denominated, framing the issue as one of long-term currency relevance.

In his evidence, Duff Gordon set out five stablecoin recommendations for policymakers and regulators. They include dropping the Bank of England holding limits; allowing a higher share of reserves in short-dated UK government debt rather than cash; enabling stablecoins to be used in wholesale settlement; pursuing international equivalence so UK rules are compatible with other jurisdictions; and permitting distributors such as Coinbase to pay rewards to stablecoin holders — something hotly debated at present across the pond in the United States.

Discussing financial stability risks, Duff Gordon said runs on stablecoins are possible but argued they are less likely and less severe than bank runs because stablecoins are “fully reserved” and do not engage in maturity transformation. He also cited the Bank of England’s proposal for a liquidity facility that would allow issuers to repo high-quality liquid assets for cash during stress, reducing the need to “fire-sell” gilts.

Coinbase UK CEO Keith Grose separately told The Block that the priority is making the framework work “in practice” through timely authorizations, proportionate stablecoin rules, and reliable access to banking and payments infrastructure.

Grose said unclear rules could push activity offshore, while “well-calibrated regulation builds trust, keeps innovation onshore, and ensures the UK can compete in next-generation payments while reinforcing sterling’s role in the digital economy.”

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