Bank of England Governor Andrew Bailey said international regulators must "wrestle" with the U.S. to establish global rules for stablecoins [1].
The friction stems from a gap between international goals and U.S. domestic policy. Because the U.S. dollar is the dominant currency for these tokens, any misalignment in regulation could destabilize global payment systems or create loopholes that threaten financial security.
Bailey said that the development of international standards for payment tokens is complicated by current U.S. policy [1]. He specifically highlighted the GENIUS Act as a point of contention. Bailey said that the act creates a gap in redemption guarantees, which could lead to U.S. dollar tokens flooding Britain during a financial crisis [4].
According to Bailey, the lack of a unified approach makes it difficult for regulators to ensure that stablecoins are backed by sufficient assets, and can be liquidated reliably. He said that getting the world to agree on stablecoin rules will not work without tackling the U.S. problem first [5].
The Governor's comments suggest a looming confrontation between the Bank of England and U.S. authorities over the oversight of digital assets. This tension reflects a broader struggle to balance the innovation of decentralized finance with the need for systemic stability—a balance that requires cooperation from the world's largest economy.
Regulators are seeking consistent international standards to prevent regulatory arbitrage, where firms move to jurisdictions with the weakest rules. Without a shared framework, the Bank of England fears that the volatility of the crypto market could leak into the traditional banking sector [1].
“International regulators will have to “wrestle” with the US over global rules for stablecoins.”
The Bank of England is signaling that the U.S. is the primary obstacle to a synchronized global regulatory framework for stablecoins. By citing the GENIUS Act, Bailey is highlighting a specific legislative vulnerability regarding redemption guarantees. If the U.S. continues to diverge from international standards, it may force other central banks to implement more aggressive protectionist measures to shield their domestic markets from potential contagion during a digital asset crash.
