The Bank of England is set to initiate a consultation period regarding new regulations for stablecoins, aiming to adopt a framework similar to that of the United States for fiat-backed cryptocurrencies.
CryptoUK, a trade association based in the United Kingdom, has expressed approval over the BoE’s anticipated steps, indicating that synchronizing these regulations with US practices would enhance trust in the domestic digital asset sector.
A representative from CryptoUK commented that aligning with the US regulatory framework for stablecoins would “provide more confidence to the industry” and help the UK “keep pace” with global competitors.
“Ultimately, it is important that the UK keeps pace with the US and other jurisdictions – the crypto industry is truly global and that means the competitive landscape shifts quickly for our members.”
The organization highlighted that the crypto industry is already gaining from the favorable regulations emerging from the US, referring to the latest moves under the GENIUS Act to assimilate stablecoins into mainstream finance.
UK central bank aims for stablecoin regulations by 2026
As reported by Bloomberg, the Bank of England is targeting the end of 2026 for the finalization of stablecoin regulations. The consultation is expected to commence on November 10, with a proposed framework closely mirroring US guidelines.
Anonymously sourced information revealed that the BoE is eager to ensure that the UK’s regulations evolve alongside the US, which is advancing stablecoin legislation.
This implies that future regulations may necessitate issuers to maintain government bonds or bills with fixed maturities, akin to US standards.
The decision follows urgings from the UK Treasury, which has reportedly pressed the Bank of England to act promptly due to concerns about the UK potentially trailing behind other regions.
BoE Governor Andrew Bailey has recently acknowledged the significant role stablecoins can play in contemporary payments, suggesting a change in the bank’s viewpoint regarding digital currencies.
Earlier, on October 1, Bailey articulated in a Financial Times op-ed that stablecoins could help lessen the UK’s dependence on commercial banks, hinting at a potential shift in financial strategy.
A more welcoming atmosphere for cryptocurrency finance
The initiative for a stablecoin framework comes as part of a broader migration towards a more accommodating attitude towards cryptocurrency within the UK financial landscape.
On October 9, the Financial Conduct Authority (FCA) lifted a four-year suspension on cryptocurrency exchange-traded notes (ETNs), granting investors avenues to access digital assets through regulated platforms like the London Stock Exchange.
Following this, asset manager BlackRock launched its Bitcoin exchange-traded product (ETP) in the UK. Additionally, the FCA has also allowed asset managers to implement blockchain technologies for fund tokenization, aligning with the government’s ambition of establishing the UK as a center for tokenized finance.
These actions collectively suggest that the UK is edging closer to a model that fosters innovation while competing with other markets to attract cryptocurrency investment.
