Bailey warns of regulatory 'wrestle' with U.S. over stablecoin standards

Bank of England Governor Andrew Bailey warned Friday that international regulators face a “coming wrestle” with the U.S. government over stablecoin standards, according to remarks made at a BoE-hosted conference on financial imbalances. Bailey, who also chairs the Financial Stability Board, highlighted diverging approaches to stablecoin regulation between the UK and U.S., widening a transatlantic policy rift as Washington pushes dollar-denominated stablecoins as global payments infrastructure.

Convertibility Concerns

Bailey zeroed in on a specific vulnerability in U.S. stablecoin design: some dollar-pegged tokens 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.

“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, per Reuters. He warned of the risk: “We know what would happen if there was a run on a stablecoin — they’d all turn up here.”

UK Regulatory Framework

The UK has been building its own stablecoin framework in parallel with U.S. efforts. The Bank of England 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.

Comparative U.S. Approach

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. President Trump signed the GENIUS Act into law in July 2025, and the FDIC proposed implementing rules in April. The Senate Banking Committee is set to mark up the broader CLARITY Act following a bipartisan compromise on stablecoin yield.

Bailey’s Longstanding Position

Bailey’s remarks reflect a position he 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.

Broader European Pushback

Bailey’s comments 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.

International Standards Process

Whether Bailey’s framing gains traction will depend on how the Financial Stability Board’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.