The UK House of Lords has opened a formal inquiry into stablecoin regulation.

Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to assets such as fiat currencies, and their increasing use in payments and financial markets has attracted attention from regulators worldwide.

The inquiry is being led by the House of Lords Financial Services Regulation Committee, and it is chaired by Baroness Noakes DBE, a senior figure in financial oversight.

In a statement issued on January 29, the committee has invited written evidence from industry experts, academics, consumers, and the general public.

The deadline for submissions is 11 March 2026.

The inquiry aims to understand how stablecoins have developed globally. It will examine the UK’s position relative to markets in the US and the EU.

Another focus is the growth potential of sterling-denominated stablecoins. The committee wants to explore how these digital currencies are being used.

It is particularly interested in who is using stablecoins and for what purposes. The risks and opportunities associated with stablecoins will also be assessed.

The inquiry will analyze regulatory approaches in other jurisdictions.

The goal is to determine what lessons the UK can learn.

This could inform how future regulation balances innovation with financial stability. The committee will consider whether the UK should adopt stricter rules or a more flexible framework.

The inquiry complements ongoing efforts by the Bank of England and the Financial Conduct Authority.

These institutions are developing new rules for stablecoins that could become widely used in payments. The Bank of England has already launched a consultation on regulating systemic stablecoins.

These are stablecoins that, if widely adopted, could pose risks to the financial system. The proposed framework aims to ensure that stablecoins are properly backed and resilient.

It also clarifies how issuers would be supervised by both the Bank of England and the FCA.

Additional measures could include holding limits and requirements to manage financial stability risks.

Industry reactions have been mixed, with some viewing the proposed regulations as cautious but necessary for consumer protection, while others argue that strict rules could slow innovation and the growth of UK-based stablecoin markets.

The inquiry is expected to consider both perspectives.

Countries around the world are grappling with how to allow stablecoin innovation while minimizing risks. The UK inquiry is part of this broader global conversation, and it could influence future regulatory frameworks in other regions.

The inquiry’s findings may shape how the UK supports digital finance and payments innovation.

It could also determine the nation’s role in global stablecoin markets. The House of Lords’ work will likely complement the ongoing regulatory developments by the Bank of England.

Together, these measures could establish the UK as a leader in safe and responsible stablecoin regulation.

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