Stablecoins need robust regulation, says UEL expert
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Published
17 March 2026
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Stablecoins will only be able to develop safely as part of the financial system if they are supported by strong and carefully designed regulation, according to Professor Iwa Salami, director of the Centre of FinTech at the University of East London.
Her calls for robust safeguards form part of evidence she has submitted to the House of Lords Financial Services Regulation Committee inquiry on the growth and proposed regulation of stablecoins in the UK.
Stablecoins are a type of digital currency designed to keep a stable value, usually by being linked to a traditional asset such as a national currency like the pound. They are widely used in cryptocurrency markets and are increasingly being explored as a way to make payments faster and cheaper.
In her submission, Professor Salami, Professor of Financial Law and Regulation at the Royal Docks School of Business and Law, argued that stablecoins could improve payments and support innovation in digital finance, but that they also create significant risks for consumers, financial stability and monetary policy if they are not properly regulated.
Drawing on research from the Centre of FinTech, the response broadly supports the regulatory plans being developed by the Financial Conduct Authority and the Bank of England. It stresses that large stablecoins that are widely used for payments should be treated as part of the core financial infrastructure, rather than simply as another type of cryptoasset.
The submission highlights potential benefits of stablecoins, including faster payments, cheaper cross-border transactions and new opportunities for innovation in digital finance.
However, it also emphasises that without strong safeguards, stablecoins could pose risks. These include uncertainty over whether users can always redeem their coins for cash, financial instability if large stablecoins face sudden withdrawals, and the possibility that widespread use of private digital currencies could affect how monetary policy works if people move money out of bank deposits.
The evidence calls for clear legal protections for stablecoin holders, strong requirements for the assets backing the coins, robust operational and cyber resilience standards, and close international cooperation between regulators.
Professor Salami said, “Stablecoins have the potential to improve the way payments work and support innovation in financial services. But for them to succeed, people must be able to trust that they are safe, transparent and properly regulated. The UK has a real opportunity to design a framework that supports innovation while protecting consumers and maintaining financial stability.”
The House of Lords inquiry is examining how stablecoins are developing globally, what risks and opportunities they present for the UK economy, and how they should be regulated. Professor Salami’s submission forms part of the evidence being considered by the committee as it evaluates the future regulatory framework for stablecoins in the UK.
The findings are due to be published later this year.