Digital Currencies in the Crosshairs: UK Rethinks, EU Pushes On, IG Makes Its Move

Is the Digital Pound an Unwelcome Distraction?

A look at the recent economic headlines from the UK would suggest that, to paraphrase Jay-Z, the Chancellor of the Exchequer has 99 problems—but the absence of a digital pound ain’t one.

The non-departmental public body funded by the UK Treasury that provides independent economic forecasts and analysis of public finances is warning that public finances are on an ‘unsustainable’ path. Meanwhile, the Bank of England has predicted a slowdown in quarterly GDP growth in Q2.

In this context, you could argue that the Bank of England has much more important matters to attend to. The mere suggestion that a digital pound could facilitate runs on commercial banks during periods of economic uncertainty should be more than enough to make policymakers think twice about a project that would come with a huge price tag.

Related: Is the BoE Right to Be Sceptical on a Digital Pound?

Even if these obstacles were to be overcome—or at least overlooked—no one will be spending digital pounds any time soon. The Bank of England has admitted that the policy case for the ‘new’ currency would only be considered after several more years of debate over where it would fit into the digital payment landscape.

The UK Parliament’s Treasury Committee has described the digital pound as potentially a solution in search of a problem, acknowledging that there is insufficient clarity over whether the risks around privacy and financial stability would outweigh the benefits.

The digital pound’s usefulness will also depend on various factors beyond the UK government and central bank’s direct control, including public appetite for continuing use of notes and coins.

A recent survey found that 13% of people in the UK use cash every day and 61% use it at least once a week. While its use is expected to decline, the survey suggested it would still account for 6% of all payments by 2033.

To use another musical reference, maybe it’s a case of ‘Dirty Cash, I want you, Dirty Cash, I need you, oh’ for the UK consumer.

European Policymakers Butt Heads with Bankers on Foreign Stablecoins

The European Commission is reportedly proposing to treat stablecoins issued outside the EU as interchangeable with those issued within the bloc, provided they share the same branding and are issued by entities with an EU licence.

The objective of this move is to standardise stablecoin treatment across the EU and unlock benefits such as faster cross-border payments. But it has potentially put the executive branch of the EU on a collision course with the ECB, which is concerned about financial stability risks.

There is little clarity on the details of the proposal, although it would make sense for the EU to position itself as a progressive market for stablecoins to avoid being left behind in the digital assets space.

The Markets in Crypto-Assets Regulation (MiCA) mandates specific reserve requirements for stablecoins, primarily focusing on asset-backed types. For significant stablecoins—those with a large number of users or a high market capitalisation—a minimum of 60% of reserves must be held in EU-regulated institutions.

Read more: MiCA's Impact Reaches Beyond Regulated Firms: Is the Crypto Infrastructure Ready?

It is possible the EU has been spooked by the passing of the GENIUS Act in the US Senate. But that seems premature, given that it still needs approval from the House of Representatives, which is currently considering its own version of stablecoin legislation—the STABLE Act.

Christine Lagarde, President of the ECB, recently informed the European Parliament that stablecoins present risks to monetary policy and financial stability. She stressed that they must be governed by robust rules, particularly when they operate across borders.

She also warned that stablecoins could weaken national sovereignty and urged lawmakers to support legislation for launching a digital euro.

Despite the ECB’s concerns, the initiative to liberalise Europe’s stablecoin market shows genuine demand for quicker, more transparent, and cost-effective cross-border payment options. The key focus now should be aligning innovation with appropriate safeguards to ensure both trust and stability.

IG Takes a Punt on Crypto

IG recently became the first UK-listed business to allow customers to buy, sell, and hold crypto assets.

The timing was interesting, given that June is historically a slow month for movement in cryptocurrency prices, with Bitcoin in particular tending to remain relatively static—especially notable at a time when arbitrage is such a powerful antidote to seasonal trends.

The fact that last month’s geopolitical tensions didn’t translate into the sorts of deviations seen following similar developments in the recent past is a further sign of the growing maturity of digital assets.

Investors are increasingly confident that crypto is a sound long-term play and are willing to ride out short-term volatility—a sensible approach when the man in charge of the world’s largest economy is both a massive advocate of crypto and liable to change policy direction at the drop of a hat.

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Feedback has been predictably mixed, with some forum users complaining about trading fees and suggesting that this is just a play to get more crypto traders interested in IG’s other offerings.

IG is clearly taking a bullish view on the future of crypto regulation in the UK, presumably based in part on the Treasury’s preference for eschewing a new regulatory regime in favour of regulating the asset class within the current framework.

However, it is also banking on UK traders’ appetite for crypto increasing. The company noted that the launch came as crypto adoption “continues to grow in the UK,” but the FCA’s most recent consumer research on cryptoassets found that the percentage of UK adults holding crypto had only increased from 10% to 12% between 2021 and 2024.

With 93% of those surveyed saying they were aware of the asset class, IG (and others) will have to work hard for new business.