Stablecoins Seen as Ideal for Cross-Border Payments, Less So for UK Retail

Cross-border payments are the clearest near-term use case for stablecoins, while consumer adoption in United Kingdom retail payments is likely to be slower, according to the Financial Conduct Authority’s Stablecoin Sprint. The FCA published findings from its March policy initiative that brought together banks, payment firms, stablecoin issuers and other industry participants to explore how stablecoins could be used. Participants said stablecoins offer the greatest advantages for cross-border payments, particularly in emerging markets with limited access to US dollars, but provide fewer benefits in major payment corridors where existing systems are already fast and relatively inexpensive. Participants also said domestic UK consumers have little incentive to switch because existing payment methods are already fast and inexpensive, though merchants could benefit from lower costs and faster settlement. The findings informed the FCA’s June 30 final rules requiring UK-issued stablecoins to be fully backed by reserve assets and redeemable at par. The regulator said the feedback will also shape its future policy on stablecoin payments.