The Bank of England has announced its intent to match the United States in the rapid rollout of stablecoin regulations, signaling a strategic move to maintain regulatory competitiveness and financial innovation. With a consultation paper scheduled for release on November 10, the UK aims to define its policy stance on stablecoins, a burgeoning sector currently valued at around $310 billion globally.
Deputy Governor Sarah Breeden emphasized the importance of synchronized regulatory efforts between allied nations, particularly between the UK and the US. Speaking at the SALT conference in London, Breeden reassured that the UK would implement its regulatory framework for stablecoins at the same pace as the United States, addressing rising concerns that Britain may be lagging behind its international counterparts—especially after the US passed the significant GENIUS Act in July.
Breeden further shared that ongoing discussions between UK financial regulators and US authorities are helping align their respective approaches. This follows a September meeting between UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent, where both nations committed to enhancing cooperation around digital asset oversight and policy development.
The Bank of England’s renewed focus on stablecoin regulation comes amid mounting pressure from within the UK’s crypto sector. Industry advocates argue that the country’s cautious regulatory stance is stifling innovation and impeding the UK’s ability to compete on the global stage. One of the most controversial proposals from the Bank of England in late 2023 suggested imposing caps on individual stablecoin holdings, limiting them to between £10,000 and £20,000—approximately $13,050 to $26,100. Critics from advocacy and industry groups warned that such limits could prove costly and operationally complex to enforce.
Beyond the UK and US, other nations are also ramping up stablecoin oversight. Canada recently introduced a proposal that would mandate fiat-backed stablecoin issuers to maintain adequate reserves and implement robust risk management frameworks. Although the Canadian government has not yet set a timeline for legislation, the initiative is part of a broader effort to modernize the financial system and improve the efficiency, affordability, and security of digital transactions for its population of over 41 million.
Institutional adoption of stablecoins is also accelerating globally. Major financial service providers such as Western Union, SWIFT, MoneyGram, and Zelle have either integrated or announced plans to incorporate stablecoin-based solutions into their platforms. This growing adoption reflects stablecoins’ potential to streamline cross-border payments, reduce settlement times, and lower transaction costs.
The U.S. Treasury has projected that the stablecoin market could expand significantly in the coming years, potentially reaching a valuation of $2 trillion by 2028. Such growth underscores the urgent need for clear and harmonized regulatory frameworks to manage the evolving risks and opportunities presented by digital currencies.
In the UK, the forthcoming consultation paper is expected to outline key principles around the issuance, governance, and usage of stablecoins within the financial system. It may also address critical areas such as consumer protection, financial stability, anti-money laundering (AML) compliance, and interoperability with existing payment infrastructure.
Moreover, UK regulators are likely to consider how stablecoins can be safely integrated into mainstream financial services without undermining monetary policy or central bank control. One area of focus is how private stablecoins might coexist with potential central bank digital currencies (CBDCs), such as the proposed “digital pound,” and whether regulatory standards should differ between the two.
Another pressing issue is the safeguarding of user funds. Regulators are expected to require that stablecoin issuers hold customer assets in segregated accounts and maintain full reserve backing, ensuring that users can redeem tokens at par value at any time. This is particularly critical in preventing liquidity crises similar to those seen during recent crypto market downturns.
Additionally, the UK may explore licensing regimes and ongoing supervision requirements for stablecoin issuers and related service providers. This would bring them under the purview of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), ensuring adherence to prudential and conduct standards akin to traditional financial institutions.
As the regulatory landscape evolves, international collaboration will be key to fostering a cohesive global framework. The Financial Stability Board (FSB) and the International Monetary Fund (IMF) have both emphasized the importance of cross-border regulatory alignment, especially for digital assets with global reach.
Ultimately, the Bank of England’s commitment to keeping pace with US stablecoin regulation reflects a shift towards a more proactive and collaborative approach. By doing so, the UK aims to strike a balance between encouraging innovation in financial technology and safeguarding the integrity and stability of its financial system.