Bank Of England Governor Just Declared War On Unregulated Stablecoins—And Crypto Companies Are Bracing For Impact

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The gloves are off in Britain’s crypto regulation battle. Bank of England Governor Andrew Bailey just drew a hard line in the sand on Oct. 1, declaring that any stablecoin widely used for payments in the UK must be regulated exactly like money in a traditional bank—complete with depositor protections and access to central bank facilities.

The announcement marks a major escalation in the BoE’s regulatory stance and has crypto industry figures scrambling to understand what comes next, according to the Financial Times.

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Bailey’s comments aren’t just regulatory noise. They signal a fundamental shift in how Britain’s central bank views the intersection of crypto and traditional finance. Stablecoins would need depositor insurance, resolution schemes, and the ability to exchange for cash without relying on cryptocurrency exchanges, according to the central bank chief.

The BoE confirmed it would publish a consultation paper on stablecoins in the coming months, setting the stage for what could become one of the most comprehensive stablecoin regulatory frameworks outside the U.S, Reuters reported.

Here’s the kicker: Bailey raised the possibility of banks and stablecoins coexisting, with non-banks taking on more credit provision roles. That’s a seismic statement about potentially restructuring how money moves through the British economy.

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Crypto industry figures have expressed concern about the BoE’s caution, citing issues including caps on stablecoin holdings the BoE has proposed, the share of backing assets eligible to earn interest, and the criteria the BoE will use to determine which stablecoins fall under its remit, according to Reuters.

The timing couldn’t be more loaded with tension. Stablecoins have surged in popularity and their demand is expected to increase further after the U.S. enacted its GENIUS Act in July, which sets federal rules for stablecoins. While America was opening the door, Britain appears to be installing a much more restrictive entry system.

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What makes this moment interesting is Bailey’s slight softening of tone. Reuters reported that Bailey’s comments in the Financial Times represented “a slight shift in tone” for the long-standing cryptocurrency skeptic, who said it would be wrong to be against stablecoins as a matter of principle.

But don’t mistake this for crypto-friendliness. Bailey also said stablecoins’ main current use as a way to enter and exit cryptocurrency trades did not amount to a standard money-like means of payment. Translation: If you’re not functioning as real money, you don’t get the privileges that come with it.

The governor’s earlier warnings were even more direct. In a July interview with The Times of London, Bailey raised concerns that the technology risked pulling money out of the banking system and undermining credit creation—a statement that sent ripples through the crypto community, Reuters reported.

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This article Bank Of England Governor Just Declared War On Unregulated Stablecoins—And Crypto Companies Are Bracing For Impact originally appeared on Benzinga.com