Bank of England Calls Stablecoins a New Form of Money

TLDR

• The Bank of England will open applications for systemic stablecoin issuers before the end of the year.
• The central bank will treat stablecoins as a new form of money under its upcoming regulatory framework.
• Systemic stablecoins used widely for payments will fall under direct Bank of England supervision.
• Stablecoins that are not systemic will be regulated by the Financial Conduct Authority.
• FCA officials said the U.K. regime supports trusted and redeemable GBP-denominated stablecoins.

The Bank of England will open applications for systemic stablecoin issuers before year-end, a senior executive said. The central bank will treat stablecoins as a new form of money under its upcoming regime. Officials outlined the approach during a panel at the Financial Times Digital Asset Summit.

Bank of England Sets Framework for Stablecoins

Sasha Mills, executive director for financial market infrastructure, confirmed the timeline during the summit discussion. She said the Bank of England will accept applications for systemic stablecoins by the end of the year. She stated that the bank treats stablecoins as “a new form of money.”

Mills explained that the bank requires stablecoins to meet standards applied to existing forms of money. She said the framework must ensure resilience and reliability for end users. She added that users should choose between tokenized deposits, stablecoins, and e-money in an interoperable way.

She said the bank does not favor tokenized deposits over stablecoins. She noted that authorities still assess which use case fits each type of digital money. She added that user preference will develop through market experience.

The bank defines systemic stablecoins as those widely used for retail or corporate payments. It said such coins could pose risks to U.K. financial stability. Therefore, the Bank of England will supervise those issuers directly.

Stablecoins that do not reach systemic scale will fall under the Financial Conduct Authority. The FCA will regulate those coins under its digital asset framework. Officials confirmed the division of oversight during the event.

Mills also addressed the global market structure for stablecoins. She said 99% of stablecoins worldwide are denominated in U.S. dollars. She noted that most were launched before the U.S. GENIUS Act took effect.

She said many dollar-backed issuers now plan new coins to align with anticipated U.S. rules. She stated that U.K. authorities are moving on a similar timeline. She said, “We’re in the same place” regarding readiness.

FCA Backs GBP Stablecoins as Dollar Market Dominates

Matthew Long, FCA director for payments and digital assets, discussed the role of pound-backed coins. He said the dominance of $-denominated stablecoins does not remove demand for GBP versions. He confirmed that the FCA supports a trusted and redeemable GBP stablecoin.

Long said the FCA designed a regime that allows compliant firms to issue stablecoins. He said regulators will stand behind coins that meet set standards. He added that firms must satisfy regulatory requirements before launch.

The FCA has approved four firms to operate inside its regulatory sandbox. Long said those companies are developing and launching stablecoins under supervision. He stated that regulators support innovation within defined guardrails.

He said, “It’s for industry to deliver the stablecoin.” He added that regulators will support growth while enforcing standards. He confirmed that oversight will focus on compliance and operational strength.

Mills said the U.K. framework may appear more robust than others. She explained that the perception stems from treating stablecoins as money. She said that the approach requires higher safeguards and clear redemption rights.

Officials reiterated that systemic applications will open before year-end. They confirmed that the full package for systemic stablecoins will be available at that time. The Bank of England will then review submissions under its new regime.

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