The United Kingdom House of Lords grilled Coinbase’s top international policy executive on Wednesday over whether stablecoins would drain bank deposits and add new risks to the UK financial system, pressing him on everything from Silicon Valley Bank‑style runs to illicit finance and Know Your Customer (KYC) rules.
During the Lords’ stablecoins inquiry, Tom Duff Gordon, Coinbase’s vice president for international policy, insisted that fully reserved, regulated stablecoins were “safer than uninsured bank deposits” because they are backed one‑to‑one by cash and high‑quality government securities and can be redeemed at par.
He argued that stablecoins could materially reduce payment costs, speed up cross‑border payments, and underpin new artificial intelligence driven “agentic” payment flows.
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Duff Gordon pushed back on suggestions that Coinbase was seeking to dodge KYC obligations and warned that overly tight Bank of England and Financial Conduct Authority (FCA) proposals on capital, holding limits and rewards risk would choke off competition. That, he said, would leave the UK lagging the United States’ Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act regime and Europe’s Markets in Crypto Assets Regulation (MiCA) framework in the global race to attract stablecoin innovation.
Lords probe deposit drain and crime concerns
The Lords repeatedly challenged Duff Gordon on who actually bears redemption risk in a crisis, whether current arrangements merely shift risk from banks to non‑bank issuers, and whether allowing rewards on stablecoins would trigger a “deposit drain” from UK banks.
Duff Gordon countered that fears over disintermediation and credit creation were “wildly exaggerated,” and that stablecoins were already used by major corporates and card plans to cut payment costs.
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Committee members also raised concerns about the role of stablecoins in crime, prompting Duff Gordon to emphasize Coinbase’s KYC, Anti-Money Laundering (AML) and sanctions screening of customers. He argued that onchain transparency and exchange-level controls could make it easier, not harder, to police illicit flows compared with traditional cash.
UK could fall behind in stablecoin race
Adam Jackson, chief strategy officer at Innovate Finance, an independent industry body for the UK financial technology sector, argued that the UK risked establishing a regime that was “more prescriptive and less competitive” than the EU’s MiCA rules. “We risk being second movers but second movers who are less competitive than the first movers,” he warned.
The hearing came as a sharp contrast to the committee’s previous session, where critics including Financial Times commentator Chris Giles and US law professor Arthur E. Wilmarth Jr expressed their doubts about whether stablecoins were likely to become a mainstream form of money in the UK and backed a tougher Bank of England approach.
Wilmarth Jr went so far as to brand the US’s GENIUS Act as a “disastrous mistake” for letting non‑banks into “the money business.”
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