Bank of England's Bailey sees 'wrestle' with US on stablecoin regulation

Bank of England Governor Andrew Bailey said on Friday he expected there to be a "wrestle" between the United States and international regulators on the treatment of stablecoins, a form of cryptocurrency he sees as a potential threat to financial stability.

Stablecoins are ‌typically pegged ⁠at a ⁠fixed rate to the U.S. dollar or another major currency, and ​aim to be an alternative to the existing banking system for making domestic ​or international payments.

The current United States administration under President Donald Trump has been keen to promote stablecoins, which often use U.S. ​Treasury bills as a backing asset.


But ⁠Bailey, who ‌chairs the Financial Stability Board, an international ​body that ​aims to coordinate regulation, has long been sceptical ⁠about cryptocurrencies and wary of the potential risks from ​stablecoins.

"If we want stablecoins to be part ​of the architecture of payments globally ... they're only going to work if we have international standards. Frankly, that, I think, is going to be a coming wrestle with the (U.S.) administration," Bailey said at a conference on financial imbalances hosted ‌by the BoE.

Bailey said he was concerned some U.S. stablecoins could not be readily turned into ​dollars without ​going through a ⁠crypto exchange, potentially limiting their convertibility in a crisis.

But if stablecoins became widely used for cross-border payments, then during a crisis hard-to-convert ​U.S. stablecoins could flow to jurisdictions such as Britain which intend to have robust obligations for convertibility, he said.

"We know what would happen if there was a run on a stablecoin - they'd all turn up here," Bailey said.