Bank of England Aligns UK Stablecoin Regulation with US

The Bank of England plans to implement stablecoin regulations by late 2025, focusing on maintaining monetary stability. This initiative follows analysis of US regulatory advancements to enhance the integration of stablecoins into the UK’s payment framework.

The UK’s regulatory move mirrors initiatives in the US, EU, and Japan. Past regulatory actions typically led to increased scrutiny and temporary asset restrictions, which could happen again with these new measures.

Bank of England Sets 2025 Stablecoin Regulation Timeline

The Bank of England plans to implement stablecoin regulations by late 2025, focusing on maintaining monetary stability. This initiative follows analysis of US regulatory advancements to enhance the integration of stablecoins into the UK’s payment framework.

Led by Deputy Governor Sarah Breeden, the regulatory framework introduces temporary holding caps and dual regulation. The approach aims to equate a regulated stablecoin’s value to a GBP issued by commercial banks and the central bank.

Potential Shifts in Stablecoin Market Liquidity Under Scrutiny

The proposed regulations could influence stablecoin adoption and market liquidity, particularly for cryptocurrencies like USDT and USDC. Stakeholders await further consultations for clarity on implementation and risk management strategies.

Insights suggest stablecoin issuers face dual regulation from the Bank of England and the FCA, impacting major assets like ETH. Historical trends indicate possible initial liquidity shifts in DeFi platforms such as Uniswap and Curve.

Sarah Breeden, Deputy Governor, Bank of England, said in a public speech: “In our regime, stablecoins don’t seek in their business models to make money from lending or maturity transformation… we do need to ensure that in all states of the world, a pound issued by a regulated stablecoin issuer is worth the same as a pound issued by a commercial bank and a banknote issued by the Bank of England. This ‘singleness of money’ is the foundation on which monetary and financial stability and ultimately economic activity depend.” – Bank of England Speech

Comparative Analysis: UK Aligns with Global Regulatory Moves

The UK’s regulatory move mirrors initiatives in the US, EU, and Japan. Past regulatory actions typically led to increased scrutiny and temporary asset restrictions, which could happen again with these new measures.

Experts anticipate enhanced regulatory clarity and compliance will foster a stable financial environment. With considerable focus on asset backing and liquidation mechanisms, historical trends suggest these steps will stabilize the market long-term.