BoE’s Bailey warns of looming ‘wrestle’ with US over stablecoin rules, flags run risk for UK

Bank of England Governor Andrew Bailey warned Friday that international regulators face a “coming wrestle” with the U.S. government over stablecoin standards, widening a transatlantic policy rift as Washington pushes dollar-denominated stablecoins as global payments infrastructure.

“If we want stablecoins to be part of the architecture of payments globally … they’re only going to work if we have international standards,” Bailey said at a BoE-hosted conference on financial imbalances, per Reuters.

Bailey, who also chairs the Financial Stability Board, zeroed in on a specific vulnerability: some U.S. stablecoins cannot be readily converted to dollars without routing through a crypto exchange, potentially limiting their convertibility in a crisis.

If dollar-pegged stablecoins become widely used for cross-border payments, he argued, a crisis could trigger a flight from tokens with weak redemption guarantees into jurisdictions with stricter convertibility rules. “We know what would happen if there was a run on a stablecoin — they’d all turn up here,” Bailey said.

The remarks reflect a position Bailey has held for years. In July 2025, he warned the world’s largest banks against issuing their own stablecoins, urging them to pursue tokenized deposits instead. Six major UK banks have since launched a live pilot of tokenized sterling deposits, aligning with that preference.

The UK has been building its own stablecoin framework in parallel with the GENIUS Act efforts in the U.S. The BoE opened a consultation in November on rules for “systemic” sterling stablecoins, proposing holding limits of £20,000 for individuals and £10 million for businesses. After industry pushback, the central bank signaled in March it was open to revising those caps, with updated draft rules expected around June.

The UK’s planned regime would require systemic stablecoin issuers to hold at least 40% of reserves in unremunerated accounts at the Bank of England, with the remainder in short-term UK government debt, specifically to ensure rapid redemption. The GENIUS Act, by contrast, requires 100% reserve backing and monthly disclosures but does not mandate that holders be able to redeem tokens directly from the issuer without intermediaries.

The friction with Washington is partly a function of diverging trajectories. President Trump signed the GENIUS Act into law in July 2025, and the FDIC proposed implementing rules in April. The Senate Banking Committee is now set to mark up the broader CLARITY Act on Thursday after a bipartisan compromise on stablecoin yield broke a months-long impasse.

Bailey’s comments also arrived the same day ECB President Christine Lagarde made her most direct case yet against stablecoins, arguing that even euro-denominated tokens threaten financial stability and monetary-policy transmission. Together, the speeches amount to a significant pushback from Europe’s two most powerful central bankers against a stablecoin regime shaped largely on U.S. terms.

Whether Bailey’s framing gains traction will depend on how the FSB’s standard-setting process unfolds. The body has issued stablecoin recommendations since 2020, but those guidelines are non-binding, and the U.S. has historically shown limited appetite for subordinating domestic crypto policy to multilateral frameworks.

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