Bank of England Proposes New Regulatory Framework for Stablecoins

The Bank of England has shifted its stance on stablecoins, signaling a MOVE from caution to structured regulation. Governor Andrew Bailey emphasized the need to harness the benefits of the technology while ensuring consumer protections comparable to traditional money. A consultation paper outlining an "advanced regime for stablecoins" is expected in the coming months.

Stablecoins, unlike cryptocurrencies such as Bitcoin, are pegged to official currencies, offering stability. Bailey argued that physical money and digital assets could coexist, with banks and stablecoin issuers both playing roles in a transformed financial system. Widely used UK-issued stablecoins may gain access to central bank accounts, granting them a status similar to commercial bank deposits.