The UK is due to finalise rules on stablecoins next year and Keith Grose, CEO of Coinbase's UK subsidiary says the country has an opportunity to turn itself into Europe's leader in the industry.
Keith Grose, head of Coinbase UK. Photo courtesy of LinkedIn
The UK could establish itself as the leading country in Europe for stablecoins, so long as it avoids imposing too strict regulations, says the head of US crypto exchange Coinbase’s regional office.
“I hope the UK chooses a more industry-friendly path [than the EU],” Keith Grose, CEO of CB Payments, Coinbase’s UK subsidiary, tells GCV. “In a way that will make businesses more excited to build in London than they would be to build in Berlin.”
The Financial Conduct Authority (FCA), the UK’s regulator, is expected to finalise the rules on issuing stablecoins in early 2026. Stablecoins are digital tokens with a value pegged to an underlying asset which is most commonly a fiat currency such as the US dollar. They will most likely be used for payments rather than as speculative investments. The FCA wants to ensure issuers provide tokens that are redeemable in cash at short notice and are consistently pegged to their underlying assets, while also allowing enough flexibility for innovation to flourish.
Stablecoins are already big business for Coinbase, which generated $910m in revenue in 2024 from its offerings of coins denominated in various currencies. Since legislation penned by the crypto-friendly Trump administration passed through Congress last month, adoption is expected to increase.
The EU’s MiCA regulations, which apply to digital assets generally, were rolled out across the bloc in December last year. They prompted concerns that smaller companies would find it hard to comply and need to exit the industry.
Grose says that now that the US and EU have clarified their rules, the UK has a “third mover advantage”, able to pick the best of each regime. But he thinks there is a risk of squandering it if the FCA does not leave the industry room to innovate.
“Regardless of your thoughts on Brexit, the fact that now we can write our own policy, create our own laws [means] the UK can again diverge from Europe and other markets,” he says.
The regulator has already shifted to be more favourable towards stablecoin issuers. It originally planned to enforce strict capital controls, where issuers would have to hold cash or short-term government bonds as backing assets. This would reduce the risk of consumers being unable to redeem their tokens as cash. But following consultation, the FCA softened its stance, saying it will grant exemptions allowing the use of an expanded pool of backing assets, including longer-term debt, subject to other conditions being met.
But the FCA has good reason to be cautious. Despite their name, stablecoins are not guaranteed to hold their value against the underlying currency. In 2023 a popular US dollar-denominated stablecoin, USDC, collapsed in value when Silicon Valley Bank folded, because the issuer, Circle, had a large portion of its reserves tied up in the bank. Although the stablecoin regained its peg four days after the collapse, the experience demonstrated the vulnerability in the system.
“I think [regulators should] define what I would say is necessary capital controls, but not onerous capital controls,” Grose says. “I think crypto is still early on [in its development].”
“We shouldn’t try and apply those same regulations [that apply to the banking sector] and just lift and shift them onto an early-stage industry.”
Coinbase UK lays the groundwork
Coinbase expanded its services to the UK in 2015 when it established CB Payments, and Grose says the country has since grown to be its biggest market outside of the US. CB Payments has primarily been an e-money service provider for UK-based Coinbase customers, letting institutional and retail customers use their money to trade in crypto via the exchange.
In February, the FCA recognised the company as a virtual asset service provider (VASP) in the UK, meaning it is satisfied the company has appropriate anti money laundering safeguards in place. This allows it to provide a wider suite of crypto products in the country beyond just handling fiat currency payments.
This is a promising step for the UK subsidiary. In July last year, the month Grose was appointed as CEO, it was fined £3.5m by the FCA for serving high-risk customers without clearance. The VASP recognition is a seal of approval.
To encourage the local ecosystem, the UK company is running an accelerator programme for startups building technology that intersects with crypto and AI, in partnership with Founders Factory and other Web3 companies based in the capital.
“We’re trying to create more of that opportunity here, as well as for the next generation of founders,” Grose says.
Similarly, Coinbase Ventures, the company’s venture investment arm, has backed UK startups, including some that are building stablecoin technology. In December, it took part in the $50m series B round for London-based BVNK, which makes a platform to manage the use of stablecoins, for example in making payments.
Britannia on-chain
On the consumer side, Grose believes the UK market has large growth potential for all kinds of digital assets. He points to a November FCA survey that showed 12% of adults in the UK owned cryptocurrency.
“Think about what a big topic it is, but actually, penetration-wise, you still have 85% of the market that hasn’t touched crypto yet,” he says.
The key to getting new users on board is to smoothly integrate products like stablecoins into the mainstream, so that they fade into the background of daily life like online banking apps have, becoming “familiar, secure, trusted”.
Coinbase is using the same strategy in all the markets it operates in: establish a presence, work with regulators and nudge the ecosystem towards diversity in product offerings and wider adoption. On June 25, it received a licence to offer a full suite of crypto products across the EU. It also received a VASP licence to operate in Argentina in January.
The UK, meanwhile, remains the fintech leader outside of the US, even as the industry stands on the cusp of a shake-up from AI. If the government can create the right environment for it to lead with digital assets, starting with stablecoins, then Coinbase’s preparation and persuasion will have paid off.
