(qlmbusinessnews.com . Wed 8th Oct, 2025) London, UK —
Andrew Bailey Signals Shift in UK's Approach to Cryptocurrency and Stablecoins
Andrew Bailey, the Governor of the Bank of England, has notably moderated his previous sceptical stance towards the future of stablecoins in Britain. He expressed in the Financial Times that it would be misguided to outright reject cryptocurrencies “on principle”. Bailey acknowledged the potential of stablecoins to usher in innovation within payment systems while cautioning that this new technology must address traditional central banking concerns to preserve public trust in currency—a fundamental element for the economy.
Understanding Stablecoins:
Stablecoins are a type of digital currency operated not by central banks such as the Bank of England or the European Central Bank but by private entities or individuals. This sector, currently unregulated in the UK, has experienced rapid growth due to speculative trading, as highlighted by the Financial Conduct Authority.
Tether (USDT) stands out as the most prominent stablecoin, with others like USD Coin (USDC-USD) and Stasis Euro (EURS-USD) also leading the pack.
Distinction from Other Cryptocurrencies:
Stablecoins differ from other cryptocurrencies such as Bitcoin or Ethereum, which are not tied to traditional financial systems. They are anchored to tangible assets, including the US dollar, British pound, or gold, aiming to maintain a stable value with minimal fluctuation.
Why the UK Government Shows Interest:
Global valuation of this category of cryptocurrency stands at around $200 billion (£148 billion), with London's foreign exchange turnover accounting for 40%. Considering this, the UK's engagement with stablecoins offers enticing prospects, as per a report from Innovate Finance.
Stablecoins promise streamlined currency conversions and the facilitation of international payments at reduced costs, attributes highlighted by Yahoo Finance.
In her Mansion House speech in July, Chancellor Rachel Reeves outlined the government's commitment to advancing blockchain technology, including stablecoins.
Furthermore, Bailey mentioned in the Financial Times that the Bank of England plans to release a consultation document outlining a framework for the UK’s stablecoin infrastructure, aiming to harness the benefits of this emerging currency. Previously, the Bank suggested that holdings in stablecoins might be limited to £20,000, offering no interest to holders.
Other jurisdictions like the European Union, Hong Kong, Japan (since 2023), and the United States have already enacted legislation to enhance the transparency of trading, moves that have been largely embraced by the cryptocurrency community.
Concerns Surrounding Stablecoins:
Despite being pegged to tangible assets, stablecoins can present risks if their value deviates significantly from the intended target, risking a “depegging” event.
Unregulated stablecoins pose a challenge to central banks, risking market instability in the event of a crash. Moreover, their acceptance could challenge the traditional banking model.
The anonymity, speed, and cost-efficiency of transactions also make stablecoins appealing for illicit activities, including scams and money laundering.
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