The British Government's National Security Strategic Investment Fund is backing a trade financing company that has secured a licence to issue a stablecoin from the Bermuda Monetary Authority.

The move comes after the United States in recent months has signalled its intention to be a major player in cryptocurrency developments and Britain is being warned that it could be left behind.

The NSSIF is the British Government’s corporate venturing arm for pioneering dual-use technologies. It is a joint initiative between the Government and the British Business Bank.

It allows the UK National Security and Defence community to adopt new technology to help protect the country’s security and prosperity.

The Digital Asset Business (M) licence granted to Haycen allows the trade financing company to issue and manage collateralised stablecoins in multiple currencies.

CoinGecko, a service that analyses the cryptocurrency market, estimates that while the entire stablecoin market is valued at more than $280 billion, tokens pegged to the British pound have a combined value of demonstrably less than a million dollars.

Haycen plans to start with the launch of stablecoins pegged to the pound. Its BMA licence allows it to issue and manage 1:1 collateralised stablecoins in multiple currencies, with provisions for yield-bearing products.

Haycen’s market-entry could bring new competition and innovation, potentially driving growth and adoption of stablecoins in cross-border trade finance.

AInvest, a comprehensive platform offering trend analysis for investors, said Haycen planned to focus on cross-border trade finance, aiming to provide institutions and corporates with more control over cash flows and lower the cost of capital.

On Friday, it said of Haycen’s BMA licence: “This regulatory approval marks a pivotal step in Haycen's evolution as the company aims to focus on cross-border trade finance.

“The stablecoins issued by Haycen will be fully collateralised at all times, providing institutions and corporates with greater control over their cash flows and potentially lowering the cost of capital.

“Haycen's stablecoins are designed to be a robust tool for cross-border trade, a sector that remains largely underserved by traditional banks despite its trillions of dollars in annual liquidity needs.”

The company's chief executive, Luke Sully, emphasised the potential of stablecoins in this context. She said: “This is a key moment in Haycen’s evolution and we are proud to be part of Bermuda’s blockchain-driven future”.

Haycen is also backed by Northern Trust, the global financial institution that provides asset servicing, investment management and wealth management services for institutions, high-net-worth individuals and families.

Britain was advised last week by cryptocurrency firms to form a national stablecoin strategy to avoid falling behind the US.

Some 30 industry figures, including those from Coinbase, Kraken and Copper, said Britain must act immediately to avoid being a rule-taker rather than a rule-maker in the digital asset era.

NSSIF forms long-term partnerships with industry and venture capital, it has been widely reported. The fund has a particular focus on artificial intelligence, data, automation and robotics; quantum technologies and semiconductors; space; flight; and future telecommunications and emerging technology, including engineering biology.

It also funds research and development programmes with select companies to trial, test and adapt technologies with end users and delivers market insight to de-risk and guide technology decision-making across government.

This unique combination of investments, research and development and insight drives UK strategic advantage, accelerates the adoption of pioneering tech, backs innovative companies to scale and supports the economy with jobs, skills and opportunities.