Widely-used stablecoins need to be regulated like money, BoE's Bailey says

Bank of England Governor Andrew Bailey announced Wednesday that widely-adopted stablecoins in Britain must face banking-level regulation, marking a significant shift in cryptocurrency oversight. Bailey emphasized that stablecoins functioning as payment methods require depositor protections and access to BoE reserve facilities, similar to traditional financial institutions.

This regulatory stance could reshape the digital asset landscape, particularly affecting popular stablecoins like USDT and USDC that dominate cryptocurrency trading volumes. The proposed framework would establish unprecedented oversight for blockchain-based payment systems, potentially impacting DeFi protocols and crypto exchanges operating in the UK market.

Bailey's announcement signals growing institutional recognition of stablecoins' role in mainstream finance, as these digital currencies bridge traditional banking and cryptocurrency ecosystems. The regulatory clarity could boost investor confidence while ensuring consumer protection in the rapidly expanding digital payment sector.

This development follows global trends toward comprehensive cryptocurrency regulation, with implications for Bitcoin adoption and broader blockchain innovation. Financial institutions and crypto companies operating stablecoin services will need to comply with enhanced regulatory requirements, potentially affecting market dynamics and cryptocurrency accessibility across Britain's financial system.