Crypto comes to Congress: What new US legislation means for Londoners

In a landmark move for the digital finance world, the United States has passed its first major national cryptocurrency legislation, a development hailed by many as a defining moment for the sector. But what does this mean for the average Londoner, and how might it ripple across global markets?

London Business School’s Professor Richard Portes, a leading voice on the subject of cryptocurrencies, joined BBC Radio London’s Shay Kaur Grewal to unpack the implications for international investors and British households alike.

“Bitcoin may have kicked things off,” Portes explained, “but it’s hardly a currency in the traditional sense. Its value is entirely belief-driven - but when that belief wavers, the price crashes.” "This extreme volatility is typical across many digital assets," added Portes, "with prices fluctuating at four to five times the rate of stock markets."

The new US legislation, however, doesn’t focus on Bitcoin. Instead, it centres on stablecoins, a form of cryptocurrency typically pegged to the US dollar and theoretically backed by reserves. “In principle, a stablecoin should work like a bank deposit,” Portes noted, “but without the actual bank, or the safety net.” In March 2023, this fragility was exposed when two major stablecoins, Tether and Circle, briefly lost their dollar peg, dropping as low as 91 cents.

So, what does this American legislative shift mean for people in London?

The answer lies in regulatory confidence. With the US now offering a clearer framework - albeit one more focused on legitimising the sector than on protecting investors - the pressure is on for other financial centres to respond. The EU introduced its own regulations over a year ago. The UK, by contrast, is still navigating the tension between embracing innovation and ensuring financial stability.

That tension is playing out between the Treasury and the Bank of England. While the former champions fintech innovation, the latter has expressed concern that widespread adoption of stablecoins could encourage people to pull money from traditional banks - undermining deposit security and financial resilience.

“The Bank of England is right to be cautious,” Portes warned. “Ordinary people don’t always realise that buying stablecoins isn’t like putting money in the bank. There’s no deposit insurance, and the backing can be shaky.”

As digital currencies edge further into the mainstream, Portes’ message to Londoners is clear: know the risks before you invest. While the legislation in the US may boost confidence in crypto markets, it’s no substitute for robust consumer protections at home.

To listen to this BBC Radio London broadcast - BBC Radio London with Shay Kaur Grewal, broadcast 28 July 2025 (16:49 - 16.56) - click here

Interested in how financial innovation intersects with global economics? Stay informed with insights from LBS faculty on the future of money, markets, and regulation. by reading the latest news on the LBS News pages.