Stablecoins have moved quickly from the edges of financial innovation into the heart of mainstream policy debate. Central banks are studying them, payments firms are building with them, and legislators are drafting frameworks around them. In the United Kingdom, serious conversations are underway about a GBP-denominated stablecoin, partly to preserve monetary sovereignty and resist the creeping influence of dollar-backed alternatives. Yet for all the regulatory energy being directed at this space, a quieter and arguably more consequential set of questions remains unresolved: how should stablecoins be accounted for, taxed, and independently assured?
These are not technical footnotes. They may determine whether stablecoins achieve genuine mainstream adoption or remain a well-regulated but ultimately peripheral technology. Polly Tsang, Senior Financial Services Regulatory Manager at The Institute of Chartered Accountants in England and Wales, has argued precisely this point in front of a parliamentary group examining digital markets and digital money. Her conclusion cuts through much of the hype: even a perfectly regulated stablecoin will struggle to function in everyday commerce if foundational accounting, tax, and assurance questions go unanswered.
The accountancy question is deceptively complex. Most people would assume a stablecoin backed one-for-one by fiat currency and redeemable on demand should simply be treated as cash. Under current accounting standards, that assumption does not always hold. Depending on who holds a stablecoin and for what purpose, it may be classified as cash, as an intangible asset, or as inventory. For a commercial bank, the distinction is not abstract. If a stablecoin holding is classified as an intangible asset rather than a cash equivalent, it can attract adverse capital treatment, becoming effectively unusable for liquidity purposes and subject to deduction from regulatory capital.
The underlying reason is a legal subtlety that sits beneath the technology. In many stablecoin structures, the holder does not own the reserves directly. What they hold is a contractual claim against the issuer, and in some arrangements, only select counterparties have guaranteed redemption rights. Economically, the instrument may behave like cash. Legally, it often does not. That gap will need to close before stablecoins can integrate naturally into bank balance sheets and prudential frameworks.
Tax presents a parallel challenge, and one that becomes vivid when you consider everyday use cases. If stablecoins were to function as a routine payment method for consumers buying groceries, commuting, or shopping online, the current approach in many jurisdictions would treat each transaction as a potential taxable event, requiring individuals to calculate gains and losses on holdings that were never intended as investments. The practical burden would be significant enough to deter adoption entirely. In the United Kingdom, HM Revenue and Customs has signalled it intends to revisit this following government announcements at Mansion House, but the direction of travel across other jurisdictions remains unclear. For Chartered Accountants advising clients in this space globally, the lack of consistent tax treatment across markets will require careful monitoring and nimble professional judgement.
Assurance may be the most consequential issue of all. The collapse of the crypto lending platform Celsius in 2022 offered a stark illustration of what can go wrong when financial innovation outpaces the protective infrastructure that surrounds traditional finance. Customers believed their holdings were safe. In practice, they were unsecured creditors in a highly leveraged structure with none of the capital requirements, deposit protections, or client asset safeguards that apply to regulated banks. Strip away the technological language and the situation was familiar: a mismatch between what customers believed they owned, what they legally owned, and what they could recover in an insolvency.
Traditional finance developed its assurance architecture over generations, driven by crises that made the costs of opacity painfully clear. Audited financial statements, client asset protections, and rigorous reporting standards exist because trust cannot be assumed. It must be constructed, and continually maintained. The digital asset ecosystem is reaching the point where it needs equivalent infrastructure. Stablecoins that aspire to serve as a genuine medium of exchange cannot rely on technology alone to provide that trust. They need the disciplines of accounting and assurance behind them.
For the global Chartered Accountancy profession, this moment represents both a responsibility and an opportunity. The frameworks being developed now in the United Kingdom and other leading jurisdictions will set precedents that echo across markets. Chartered Accountants are well placed to contribute to that work: advising on classification, supporting standard-setters, shaping assurance approaches, and helping clients navigate a landscape that is genuinely novel but also deeply connected to enduring principles. The newest form of money, it turns out, needs some of the oldest professional disciplines to make it work.
