The Payments Association, a representative body for the payments industry, has released a report providing a technical and commercial analysis of stablecoin use cases in the global financial infrastructure and evaluates the UK’s current competitive position. Entitled Stablecoins across the payment stack: Applications, adoption and regulatory readiness, the report identifies five primary areas where stablecoins are being deployed to address inefficiencies in traditional financial systems: cross-border settlements, merchant payment costs, trade finance, the tokenisation of real-world assets and the emerging field of "agentic commerce," where AI agents require high-frequency, low-value settlement rails. Detailed analysis within the report highlights that while the technology offers the potential to reduce transaction costs by over 99% in certain cross-border scenarios and automate complex trade finance through smart contracts, the UK faces significant structural hurdles. Specifically, the report points to the dominance of US dollar-denominated stablecoins, which currently account for 99% of the market, as a challenge to the future international role of sterling. Accompanying the report is The Payments Association’s formal response to the Bank of England’s recent consultation on systemic stablecoins. The association expresses concern that the proposed regulatory framework may inadvertently hinder the growth of a domestic market. Key areas of concern include the requirement for issuers to hold 40% of backing assets in unremunerated central bank deposits and the implementation of strict holding limits for individuals and businesses. Riccardo Tordera-Ricchi, Vice President of Policy and Government Relations at The Payments Association, noted that the current proposals may not yet provide the necessary foundation for a competitive systemic stablecoin ecosystem. He indicated that the industry is calling for a revision of backing asset requirements, suggesting an 80:20 split between government debt and central bank deposits to better support sustainable business models. He also suggested that the proposed holding limits of £20,000 for individuals and £10 million for businesses could discourage institutional adoption and may send a restrictive signal to the international market. He said: "Our community’s committed engagement on the recent stablecoin regulation consultations from the FCA and BoE reflects that agreeing on the right framework is an important topic for our members. Their interest underscores the industry’s collective commitment to ensuring that the UK payments sector continues to meet the needs of all those who make and receive payments. Nonetheless, it’s evident that the current proposal falls short of providing an adequate foundation for a competitive and attractive stablecoin framework." The report, produced by the association’s Digital Currencies Working Group, features case studies and technical contributions from a broad range of industry practitioners, including representatives from Swift, Elmore Insurance Brokers, Addleshaw Goddard, Travers Smith, OpenPayd, Clear Junction, NOBO and Worldpay. These contributions provide a reference point for the operational realities of digital money and the practical challenges of meeting new regulatory standards. The findings conclude that without a more flexible regulatory approach that aligns with international developments in jurisdictions such as the EU, Singapore and the US, the UK may struggle to attract the investment required to lead in the next generation of digital financial services.NoYesRegTech22 Apr, 2026