Bank of England Governor Andrew Bailey has warned that crafting meaningful international standards for stablecoins will require a direct confrontation with the Trump administration, which has taken a markedly more permissive approach to digital assets than most other major economies.
Speaking at a conference last Friday, Bailey made clear that global stablecoin regulation cannot function without coordinated international standards, but acknowledged that reaching those standards with the current US government will not be straightforward. “If we want stablecoins to be part of the architecture of payments globally, they’re only going to work if we have international standards,” he said, adding that achieving those standards would involve what he described as a “coming wrestle” with the US administration.
Bailey also chairs the Financial Stability Board, an international regulatory coordination body, giving his comments institutional weight beyond his role at the Bank of England alone.
Why the US approach is creating friction
The source of tension is a fundamental divergence in regulatory philosophy. The Trump administration has actively courted the crypto industry and positioned the US as a global hub for digital asset innovation. The GENIUS Act, which established a formal regulatory framework for stablecoin issuers in the US, reflects a broadly permissive approach that prioritises market development over systemic risk containment.
Other major regulators, including the Bank of England and the Financial Stability Board, take a different view. Bailey has consistently characterised stablecoins as a potential threat to financial stability, arguing that they represent a lightly regulated alternative to the banking system that carries real systemic risks if allowed to scale without robust oversight.
A key concern Bailey raised relates to convertibility. He noted that some stablecoins cannot be readily exchanged for cash without routing through a crypto exchange, a structural limitation that could create serious problems in periods of market stress. If dollar-backed stablecoins that are difficult to convert begin circulating widely in cross-border payments, Bailey warned, a loss of confidence could trigger a run, and the resulting pressure would likely fall on jurisdictions with stronger conversion rules, such as the UK.
“We know what would happen if there was a run on a stablecoin; they’d all turn up here,” he said.
A $317 billion market at the centre of a regulatory divide
The stakes are not trivial. The global stablecoin market is currently valued at more than $317 billion, according to CoinGecko data, with the largest tokens overwhelmingly pegged to the US dollar and backed by US Treasury bills and cash equivalents. That dollar dominance is precisely what makes the US position so consequential, any international standard for stablecoins will inevitably need to account for how Washington chooses to regulate the assets that underpin most of the market.
Bailey’s comments arrive at a moment when the US Congress is already wrestling with these questions domestically. The CLARITY Act, a broad digital asset market structure bill scheduled for a Senate Banking Committee markup on May 14, includes provisions on stablecoin yield that have become a flashpoint between the crypto industry, the banking lobby, and regulators. US banking groups have pushed for the bill to ban third-party platforms from offering yield on stablecoins, citing deposit flight concerns. The latest version of the bill prohibits rewards on idle balances while allowing “other forms of customer rewards”, a compromise that has satisfied neither side fully.
As the US finalises its domestic stablecoin framework and the rest of the world watches closely, Bailey’s warning signals that the international dimension of this debate is only just beginning. Whether the US is willing to coordinate, or whether it pursues a unilateral standard that others are left to adapt to, may be one of the defining regulatory questions of the coming years in crypto.
