Bank of England approach to regulation of sterling backed systemic stablecoins risks stalling the market before it starts while US and EU speed ahead with beneficial regulatory environment, warns Ben Lee, partner in the crypto tax team at Andersen LLP
The Bank of England’s consultation on a regulatory framework for sterling‑denominated systemic stablecoins arrives at a critical moment for the UK’s digital asset landscape. Stablecoins are already embedded in global financial infrastructure, settling billions of dollars’ worth of transactions each day.
For UK businesses, advisers and financial institutions, a credible GBP‑backed alternative could offer efficiency gains, new payment channels and an important step towards modernising the financial system.
However, the Bank’s proposals, though well‑intentioned, raise fundamental questions about whether a viable sterling stablecoin market can emerge under the structure being suggested. The consultation emphasises innovation and competition, but the substance of the framework risks creating barriers that few issuers will be willing or able to overcome.
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