UK Lords Quiz Coinbase on Stablecoin Risks, Bank Drain Fears

* UK Lords probe stablecoins' risk to bank stability, crime, and innovation. * Coinbase defends stablecoins as safer than uninsured deposits. 2026-03-04 On March 4, 2026, CoinTelegraph reported that the UK House of Lords grilled executives from Coinbase and Innovate Finance about stablecoins. The committee questioned if stablecoins could destabilize bank deposits, foster innovation, or create illicit finance risks, highlighting concerns about financial stability, criminal activities, and potential bank deposit withdrawals. Tom Duff Gordon, Coinbase's Vice President for International Policy, emphasized that well-regulated stablecoins provide a safer alternative to uninsured bank deposits. He argued that these coins, when backed by high-quality assets, can reduce payment costs and drive financial innovation. Gordon added that regulatory oversight would safeguard economic stability. Meanwhile, Adam Jackson, Chief Strategy Officer at Innovate Finance, cautioned against overly restrictive UK regulations. He warned that such rules could suppress innovation and competition, leaving the country behind the United States and the European Union. Jackson specifically criticized the UK's potential prescriptive approach, which he contrasted with the EU's more flexible Markets in Crypto-Assets (MiCA) regulation. Committee members pressed further, asking who would bear the risk in a potential financial crisis and exploring whether risk would shift from traditional banks to non-bank issuers. They also questioned if stablecoin rewards or yields might trigger significant deposit withdrawals from UK banking institutions. On March 4, Tom Duff Gordon, Coinbase's Vice President for International Policy, said during the session that fears of disintermediation were "wildly exaggerated." The session also turned to the potential for stablecoins to be misused for illicit activities. Duff Gordon underscored Coinbase’s rigorous adherence to Know Your Customer (KYC), Anti-Money Laundering (AML), and sanctions screening protocols. He highlighted that blockchain technology offers transparency and stated that superior controls at the exchange level are effective tools for monitoring financial flows, surpassing traditional cash transactions. This hearing followed an earlier meeting where critics, including Financial Times commentator Chris Giles and US law professor Arthur E. Wilmarth Jr., voiced skepticism about stablecoins' viability as mainstream money. They advocated for the Bank of England to proceed carefully to reduce potential risks. As of 15:08 UTC on March 4, major stablecoins such as First Digital USD (FDUSD), USD Coin (USDC), and TrueUSD (TUSD) were all trading at $1, with 24-hour volume changes of 0.118%, 0.012%, and 0.014%, respectively.