As the House of Lords Financial Services Regulation Committee calls for the proposed UK stablecoin regulatory regime to be more flexible, KPMG’s latest UK Financial Services Sentiment Survey shows banks are ready to scale digital asset activity, but say regulatory uncertainty remains the biggest barrier.
New data from the survey of 150 banking leaders found that 83% regard stablecoins as important to their growth strategy in the next 3-5 years (with 45% saying they are ‘very important’), and 93% saying greater regulatory clarity would accelerate their involvement. This echoes the House of Lords Committee’s warning that the UK now needs greater regulatory certainty if it is to remain competitive.
Kate Dawson, Director in KPMG’s UK Regulatory Insight Centre, said: “The Committee’s report rightly addresses one of the biggest issues facing the UK’s digital assets market - certainty. Our data shows there is strong appetite among the UK’s banks to explore stablecoins and broader digital asset use cases, but there needs now to be implementation of the proposed stablecoin regulation and for it to be aligned with international developments. Without that certainty, there is a real risk that investment and innovation will move to other markets and the UK’s payment and market infrastructure could suffer as a result.”
Key findings include:
- 83% of firms say stablecoins are important to their growth strategy over the next three to five years.
- 95% are confident they could scale digital asset activity if market conditions are favourable.
- 93% say greater regulatory clarity would accelerate their organisation’s involvement in digital assets.
- 78% say they are likely to partner with another bank to develop a joint stablecoin.
- 87% expect stablecoins to have some impact on traditional bank deposits over the next three to five years.
The survey also found that regulatory uncertainty is the single biggest barrier to scaling digital asset activity, cited by 18% of firms, followed by risk and compliance concerns (17%) and technology and infrastructure challenges (16%). More than half of respondents (58%) said that the growing focus on resilience, driven by cyber risks and geopolitical shocks, is accelerating innovation in digital assets rather than slowing it.
