Bank of England Governor Andrew Bailey has indicated that international regulators anticipate a significant disagreement with the United States concerning the establishment of global standards for stablecoins. This divergence highlights a growing policy gap between transatlantic authorities, particularly as the U.S. advances its vision for dollar-denominated stablecoins as a component of global payment infrastructure.
Speaking at a Bank of England conference focused on financial imbalances, Bailey emphasized the necessity of international consensus for stablecoins to be effectively integrated into the global payment system. “If we want stablecoins to be part of the architecture of payments globally … they’re only going to work if we have international standards,” he stated, as reported by Reuters.
Key Takeaways
- Bank of England Governor Andrew Bailey anticipates a “wrestle” with the U.S. over international stablecoin standards.
- Bailey expressed concerns that U.S. stablecoins with limited redemption capabilities could pose risks to jurisdictions like the UK during financial crises.
- These comments coincide with U.S. legislative efforts, including upcoming markups of the CLARITY Act, and the UK’s development of its own stablecoin regulatory framework.
A specific area of concern highlighted by Bailey, who also chairs the Financial Stability Board (FSB), relates to the redemption mechanisms of certain U.S. stablecoins. He noted that some of these tokens may not be readily convertible to U.S. dollars without involving a cryptocurrency exchange, which could restrict their liquidity and usability during times of financial stress. Bailey posited that if dollar-pegged stablecoins achieve widespread adoption for cross-border transactions, a financial crisis could lead to a rapid movement away from tokens with weaker redemption guarantees towards jurisdictions with more robust convertibility regulations. He cautioned, “We know what would happen if there was a run on a stablecoin — they’d all turn up here,” implying such assets could flood into the UK.
This stance aligns with Bailey’s previous warnings regarding the issuance of stablecoins by large financial institutions, where he has previously advocated for tokenized deposits as a more suitable alternative. Indeed, six major UK banks have initiated a pilot program for tokenized sterling deposits, reflecting this preference.
The United Kingdom has been proactively developing its own stablecoin regulatory framework, running parallel to legislative initiatives in the U.S., such as the CLARITY Act. In November, the Bank of England initiated a consultation on proposed rules for “systemic” sterling stablecoins, which included initial proposals for holding limits. Following feedback from the industry, the central bank indicated in March its openness to revising these proposed limits, with updated draft regulations expected around June.
The UK’s proposed regulatory approach for systemic stablecoin issuers mandates that a minimum of 40% of reserves be held in unremunerated accounts at the Bank of England, with the remaining reserves to be invested in short-term UK government debt. This structure is designed to facilitate rapid redemption. In contrast, the U.S. CLARITY Act, for instance, requires 100% reserve backing and monthly disclosures but does not explicitly mandate that token holders can redeem directly from the issuer without intermediaries.
The current friction between the UK and the U.S. on stablecoin regulation is partly attributable to their differing legislative timelines and approaches. President Trump signed the CLARITY Act into law in July 2025, and the FDIC has proposed implementing rules. The Senate Banking Committee is scheduled to review the broader CLARITY Act on Thursday, following a bipartisan agreement on stablecoin yield that resolved a prolonged stalemate.
Bailey’s remarks were made on the same day that European Central Bank President Christine Lagarde voiced strong opposition to stablecoins, arguing that even euro-denominated tokens could undermine financial stability and the transmission of monetary policy. The combined statements from these two influential European central bankers represent a significant pushback against a stablecoin regulatory landscape that appears to be heavily influenced by U.S. perspectives.
Potential Regulatory Precedent
The divergence in regulatory philosophies between the Bank of England and U.S. authorities, as articulated by Governor Bailey, could establish a significant precedent for future international crypto-asset regulation. If the Financial Stability Board, under Bailey’s chairmanship, manages to align member jurisdictions towards the UK’s proposed reserve and redemption standards, it could challenge the U.S.-centric model for stablecoin oversight. However, the FSB’s recommendations have historically been non-binding, and the U.S. has demonstrated a tendency to prioritize domestic policy frameworks over multilateral consensus in the cryptocurrency space. The effectiveness of Bailey’s advocacy will hinge on the FSB’s standard-setting process and the willingness of major economies, particularly the U.S., to adopt internationally agreed-upon rules that might diverge from their national objectives.
Based on materials from : www.theblock.co