The Bank of England will open applications for a system-wide stablecoin by the end of the year, setting standards equivalent to existing forms of currency, given that 99% of the market is still denominated in USD.
The Bank of England (BoE) is positioning stablecoins as a peer-to-peer form of currency alongside bank deposits and cryptocurrencies, not as speculative instruments or ancillary financial products. Speaking at the Financial Times Digital Asset Summit on Wednesday, Sasha Mills, the BoE's Chief Executive Officer for Financial Market Infrastructure, said the central bank will open applications from institutions wishing to issue system-wide stablecoins before the end of this year.
The Bank of England (BoE) defines "systemic stablecoins" as those that are used sufficiently widely in payments to pose a risk to national financial stability, and therefore will be subject to direct central bank oversight, while stablecoins that do not reach this threshold will fall under the jurisdiction of the Financial Conduct Authority (FCA).
Mills emphasized that any stablecoin seeking recognition must meet the same robust standards as any other form of currency in the system, a requirement she acknowledged makes the UK's regulatory regime "appear to be stricter," but that's precisely because the BoE treats stablecoins as real currency.
Technologically neutral, but not standards-neutral.
Notably, the Bank of England (BoE) stated it is not choosing sides between stablecoins and Tokenize deposits, two forms of digital currency competing for a place in the future financial infrastructure. Mills acknowledged that at this stage it is unclear which use case is better suited to the other, and that market preferences “will emerge with experience.” What the BoE wants to ensure is interoperability between the options, so that end users can seamlessly switch between stablecoins, Tokenize deposits, and cryptocurrencies.
Against this backdrop, the question of stablecoins pegged to the British pound has emerged as a strategic priority. Matthew Longing of the FCA stated that the agency has approved four companies operating in a regulatory trial environment and is supporting them in issuing compliant GBP stablecoins, but stressed that the responsibility for product delivery rests with the industry, not the regulatory body.
Currently, 99% of global stablecoins are still denominated in USD, and the majority were created before the US GENIUS Act came into effect, meaning they do not yet comply with the new legal framework. Mills believes that, in terms of timing, the UK and the US are in the same position in shaping the next generation of compliant stablecoins, a race that London clearly does not want to be left out of.
