US GENIUS Act Labeled a 'Disastrous Mistake'
During a public hearing on February 4, the UK's House of Lords Financial Services Regulation Committee heard damning testimony against the US approach to stablecoin regulation. Professor Arthur E. Wilmarth Jr., a US law expert, described the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act as a "terrible" and "disastrous mistake." He argued the bill creates a form of regulatory arbitrage, allowing lightly supervised firms to enter "the money business" and undermine a prudential framework built over centuries within the banking system. Wilmarth stated he had a "hard time agreeing with anything in the bill," positioning the Bank of England's proposed regime as a more robust and sound alternative.
Experts Define Stablecoins as 'Crypto On-Ramps'
Witnesses cast doubt on the immediate utility of stablecoins beyond the crypto ecosystem. Chris Giles, an economics commentator for the Financial Times, told the committee that their current primary use is as "on- and off-ramps" for trading what he termed "intrinsically worthless assets." While acknowledging potential efficiencies for large-scale cross-border transfers, Giles remained skeptical that sterling-denominated stablecoins could meaningfully compete with the UK's existing instant, low-cost domestic payment systems. He also warned that stablecoins are attractive for illicit finance, describing them as potential "new suitcases of cash" that demand strong international oversight and KYC/AML checks.
UK Endorses Stricter, Bank-Like Regulation
The hearing revealed strong support for the Bank of England's move to regulate stablecoins with the same rigor as traditional money. Giles welcomed the central bank's focus on mandating strict asset-backing rules, credible resolution plans, and an ultimate liquidity backstop to prevent a catastrophic run. This cautious approach, which contrasts with the US model of permitting non-bank issuance, suggests the UK is charting a distinct regulatory path. The consensus from the hearing indicates that for stablecoins to gain legitimacy in the UK, they must operate under a framework that prioritizes financial stability over unfettered innovation.
