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With the Bank of England gearing up to accept applications from would-be stablecoin issuers, its executive director of financial market infrastructure explained that the central bank is treating stablecoins as “a new form of money.”
Speaking in a panel discussion at the Financial Times Digital Asset Summit, Sasha Mills noted that, “By the end of the year, we will be open and welcoming applications” from those looking to launch “a systemic stablecoin for widely used payments in the U.K.”
Ahead of the U.K.’s stablecoin regime coming into force, the Bank of England is “not picking winners” in the debate between tokenized deposits and stablecoins, Mills said, noting that at this stage, “We do not know which use case is better suited for which type of new money.”
“We're treating—because we think that's the case—stablecoins as a new form of money,” Mills explained. “It needs to be equally robust as all the other forms of money,” enabling end users to “choose in an interoperable way” between alternatives such as tokenized deposits, stablecoins and e-money. “That preference will come with experience,” she added.
The bank defines “systemic stablecoins” as “those that are widely used in payments and therefore may pose risks to U.K. financial stability,” while those not widely used for retail or corporate payments will be regulated by the Financial Conduct Authority.
With the lion’s share of the stablecoin market denominated in USD, the FCA’s Director for Payments and Digital Assets, Matthew Long, insisted that there is still a role for a GBP-denominated stablecoin.
UK Selects Firms for Stablecoin Regulatory Sandbox, Including Revolut
“We've created a regime where we could have a trusted, redeemable stablecoin, which we're proud to stand behind,” Long said, pointing out that the FCA has approved four firms to operate in its regulatory sandbox.
“What we are doing is supporting those firms with innovation,” he said, adding that, “They're meeting those standards that we've set on our regulation, and they are launching stablecoins.” Ultimately, he said, “from a regulator's point of view, it's for us to support that industry, support that growth, but ultimately it's for industry to deliver the stablecoin.”
On prediction market Myriad, owned by Decrypt's parent company Dastan, users put just a 13% chance on one of those firms, neobank Revolut, launching its own stablecoin before July.
The Bank of England’s Mills pointed out that while 99% of global stablecoins are denominated in dollars, they were created prior to the GENIUS Act coming into force in the U.S., “so they're not GENIUS-compliant.”
In the dollar-stablecoin industry, she noted, stablecoin issuers are “issuing a new type of stablecoin, consistent, or anticipated to be consistent with the legislation.” With the U.K.’s “full package” for systemic stablecoins set for applications by the end of the year, she said, in terms of timing, “We're in the same place” as the U.S.
While the U.K.’s stablecoin regime is “perceived as being more robust,” Mills added, “that's because we're allowing it and treating it in a way that is money.”
