Bank of England Governor Andrew Bailey said on May 8 that global regulators are heading toward a direct clash with the United States over how stablecoins should be governed in international payments. He warned that Washington’s more permissive approach could disrupt efforts to build a unified rulebook and leave jurisdictions such as the UK exposed in a financial crisis.
Bailey made the remarks at a Bank of England conference on financial imbalances. He said any stablecoin system that aims to serve cross-border and global payments can only work if countries agree on common oversight standards, and he suggested that reaching such an agreement with Washington will be difficult. Reuters quoted him as saying, “Frankly, that, I think, is going to be a coming wrestle with the administration.”
Bailey linked the warning to his international regulatory role
The comments carried weight beyond the Bank of England alone. Bailey was speaking in his dual role as BoE governor and chair of the Financial Stability Board, the body that coordinates financial regulation across major economies. His core message was clear: stablecoins can only function as part of the global payments architecture if international standards exist.
The Trump administration has been pushing to make the US the main hub for stablecoin issuance. Washington has treated stablecoins, most of which hold US Treasury bills as reserve assets, as a central part of its crypto policy agenda through the GENIUS Act. That stance puts the US at odds with regulators in the UK and Europe, where officials tend to view stablecoins as a possible source of systemic risk rather than a channel for financial innovation.
Redemption risk sits at the center of the BoE’s concern
Bailey pointed to redemption mechanics as a specific problem. He said some dollar-denominated stablecoins cannot be converted back into cash directly and instead require users to route through a crypto exchange. In a period of market stress, that structure could become a serious weak point. If such tokens become embedded in cross-border payment flows, a loss of confidence could drive capital toward jurisdictions that maintain stricter convertibility standards.
“We know what would happen if there was a run on a stablecoin—they’d all turn up here,” Bailey said. According to DeFiLlama, the global stablecoin market has grown beyond $322 billion, with dollar-backed tokens making up most of that total. For UK regulators, that scale means any instability could spread quickly through payment channels rather than remain isolated inside crypto markets.
UK consultations continue as US legislation moves ahead
The Bank of England opened a public consultation in November 2025 on rules for systemically important sterling stablecoins. In March 2026, it signaled that it was open to revising the holding caps proposed earlier, with updated draft rules expected around June 2026.
Bailey’s May 8 warning came as US lawmakers prepared for a May 14 Senate Banking Committee markup of the CLARITY Act. FinanceFeeds had also reported that the BoE was targeting a full stablecoin regulatory framework by the end of 2026, while the Financial Conduct Authority was expected to run parallel consultations on issuance and custody before both agencies finalize a joint framework. A separate report noted that Circle, Tether, and PayPal were already preparing to operate under the incoming UK regime.