Bank of England Governor Andrew Bailey has warned that international regulators could face a difficult confrontation with the United States over how stablecoins should be governed across global payment systems.
Summary
- Andrew Bailey said global regulators may clash with the U.S. over stablecoin rules and international payment standards.
- The Bank of England governor warned that some dollar stablecoins may not remain easily redeemable during market stress.
According to Reuters, Bailey said at a conference on Friday that stablecoins would only function properly in international payments if regulators agreed on common standards, adding that discussions with the U.S. administration were likely to become a “coming wrestle.”
Bailey’s comments came as the Trump administration continued backing stablecoin adoption through the GENIUS Act, which established a regulatory framework for issuers in the U.S. Dollar-backed stablecoins currently dominate the sector, with CoinGecko data valuing the market at more than $317 billion.
Most of the largest stablecoins are tied to the U.S. dollar and rely on reserves such as Treasury bills and cash held in dollars. Regulators outside the U.S., including officials in the UK, have repeatedly argued that stablecoins could create risks for the banking system if oversight remains too light.
Serving as chair of the Financial Stability Board, Bailey said he still viewed stablecoins as a potential financial stability risk. He told the conference that some stablecoins may not be easily redeemable for cash without going through crypto exchanges, which could create problems during periods of market stress.
Concerns over convertibility have shaped the Bank of England’s own regulatory proposals. In consultation papers released in November 2025, the central bank proposed temporary limits of £20,000 for individual stablecoin holdings and £10 million for corporate balances as part of its planned framework for pound-backed stablecoins.
Bank of England keeps stricter line on stablecoins
Under the Bank of England proposal, issuers would also be required to hold 40% of their reserves as non-interest-bearing deposits at the central bank, while the remaining 60% could be invested in short-term UK government debt.
At the time, the Bank of England said the structure was designed to support redemptions during periods of stress and maintain confidence in stablecoin reserves. Exemptions were included for firms such as supermarkets and crypto trading platforms that may need larger balances for operational reasons.
Bailey has repeatedly questioned whether stablecoins could weaken state control over money if they grow without strong safeguards. Last year, he said stablecoins “have to maintain their nominal value” because they are being designed to function as money and payment instruments.
Friday’s remarks also touched on cross-border flows. Bailey warned that if hard-to-redeem dollar stablecoins spread internationally, countries such as the UK could end up absorbing redemption pressure during a market panic.
“We know what would happen if there was a run on a stablecoin; they’d all turn up here,” Bailey said, according to Reuters.
Similar concerns have surfaced in Washington during negotiations over crypto legislation. U.S. banking groups have urged lawmakers to prohibit crypto platforms from offering yield on stablecoins, arguing that such products could compete with bank deposits while operating outside traditional banking rules.
Negotiators failed to reach a full agreement after months of talks. The latest draft of the Senate market structure bill bans rewards on idle stablecoin balances while still allowing platforms to provide other customer incentive programs.
The Senate Banking Committee, which delayed a vote on the legislation earlier this year, is scheduled to hold a markup session on Thursday.
