Bank of England’s Bailey Warns of “Coming Wrestle” With U.S. Over Stablecoin Standards

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Bank of England Governor Andrew Bailey said Friday that international regulators face a “coming wrestle” with the U.S. government over stablecoin rules. Bailey warned that some dollar-pegged stablecoins may be challenging to redeem directly in a crisis, creating risks that could spill into jurisdictions like the UK.

Bailey Says Stablecoins Need International Standards to Work

Speaking at a Bank of England conference on financial imbalances, Bailey argued that stablecoins can only function as global payments infrastructure if they operate under agreed international standards.

“If we want stablecoins to be part of the architecture of payments globally, they’re only going to work if we have international standards,” Bailey said, per Reuters.

Bailey, who also chairs the Financial Stability Board, flagged a specific concern. Some U.S. stablecoins cannot be converted directly to dollars without routing through a crypto exchange, which could limit their redeemability in a crisis. If those tokens are widely used for cross-border payments, a loss of confidence could trigger a rush into jurisdictions with stricter convertibility rules.

“We know what would happen if there was a run on a stablecoin — they’d all turn up here,” Bailey said.

UK and U.S. Stablecoin Frameworks Are Diverging

The UK has been building its own stablecoin regime in parallel with U.S. efforts. The Bank of England opened a consultation in November on rules for systemic sterling stablecoins, proposing individual holding limits of £20,000 and business limits of £10 million. After industry pushback, the central bank signaled in March it was open to revising those caps, with updated draft rules expected around June.

The UK’s planned framework would require systemic stablecoin issuers to hold at least 40% of reserves in unremunerated accounts at the Bank of England, with the remainder in short-term UK government debt. The structure is designed to ensure rapid redemption.

The U.S. GENIUS Act, which President Trump signed into law in July 2025, requires 100% reserve backing and monthly disclosures but does not mandate that holders be able to redeem tokens directly from the issuer without intermediaries. That gap in direct redeemability is at the center of Bailey’s concern.

Bailey Echoes Lagarde as Europe Presses for Stricter Stablecoin Rules

Bailey’s remarks landed the same day ECB President Christine Lagarde argued that even euro-denominated stablecoins threaten financial stability and monetary policy transmission. Together, the two speeches amount to coordinated pushback from Europe’s most powerful central bankers against a stablecoin regime shaped largely on U.S. terms.

Bailey has held this position for some time. In July 2025, he warned the world’s largest banks against issuing their own stablecoins and urged them to pursue tokenized deposits instead. Six major UK banks have since launched a live pilot of tokenized sterling deposits.

The FSB, which Bailey chairs, has issued stablecoin recommendations since 2020, but those guidelines are non-binding. The U.S. has historically shown limited interest in subordinating domestic crypto policy to multilateral frameworks, which is what makes Bailey’s “coming wrestle” framing focused rather than procedural.

CLARITY Act Momentum Tightens the Window for Global Stablecoin Coordination

The Senate Banking Committee is set to mark up the CLARITY Act on Thursday after a bipartisan compromise on stablecoin yield broke a months-long impasse. The FDIC proposed implementing rules for the GENIUS Act in April.

The U.S. legislative momentum narrows the window for international coordination. If U.S. stablecoin standards are locked into law before the FSB process produces binding recommendations, the “wrestle” Bailey described becomes harder to resolve through multilateral channels.