The Bank of England’s Recognition of Stablecoins
The Bank of England is preparing to welcome applications from potential stablecoin issuers, marking a significant step in its recognition of these digital currencies as an emerging category of money. During a discussion at the Financial Times Digital Asset Summit, Sasha Mills, the central bank’s executive director for financial market infrastructure, emphasized that stablecoins are considered a new form of currency that requires the same robustness as traditional money.
Systemic Stablecoins and Regulatory Framework
Mills announced that by the end of this year, the Bank will begin accepting submissions from entities interested in developing what it terms “systemic stablecoins.” These are defined as stablecoins that are widely utilized for payments, which could pose risks to financial stability within the U.K. Conversely, stablecoins not intended for widespread retail or corporate transactions will be regulated under the Financial Conduct Authority (FCA).
Opportunities for GBP-Tied Stablecoins
The FCA’s Director for Payments and Digital Assets, Matthew Long, pointed out that while the majority of stablecoins operate in the U.S. dollar, there remains an opportunity for stablecoins tied to the British pound (GBP). He mentioned that the FCA has already approved four companies to test their projects within a regulatory sandbox, emphasizing the authority’s commitment to fostering innovation in this space.
Global Stablecoin Landscape
While Mills noted that 99% of global stablecoins are dollar-denominated—due to their creation before the introduction of the U.S. GENIUS Act—she acknowledged that new issuers are now pursuing compliance with current regulations. Mills remarked on the parallel progression of U.K. and U.S. stablecoin frameworks, asserting that the U.K. regime is perceived to be more robust partly because it treats stablecoins as a legitimate form of money.
Market Predictions and Future Outlook
In an interesting side note, data from a prediction market called Myriad suggests that users believe there’s only a 13% chance that the neobank Revolut will launch its own stablecoin before July.
As the U.K. nears the implementation of its regulatory structure for stablecoins, the industry looks on with anticipation as to how the landscape will evolve.
