Quick Stats:
- BoE Governor Andrew Bailey confirmed that bitcoin and stablecoins will require different regulatory approaches.
- The Bank of England is still exploring a digital pound, set to launch later this year.
- Institutional interest in Bitcoin continues to grow, despite central bank hesitation.
During a speech at The University of Chicago Booth School of Business in London, Bank of England Governor Andrew Bailey emphasized that Bitcoin and stablecoins require separate regulatory frameworks, highlighting the need for stricter oversight on stablecoins while maintaining skepticism toward Bitcoin’s monetary role.
Bailey acknowledged that global crypto regulation is in flux, particularly following the election of pro-crypto U.S. President Donald Trump. Addressing the uncertainty surrounding potential regulatory shifts in the U.S., Bailey criticized the previous administration’s approach, particularly the SEC’s reliance on court enforcement rather than establishing a clear legal framework.
“We don’t yet know what the Trump administration is going to propose in terms of reforms on crypto regulation,” Bailey stated, according to a BoE press office transcript, observed by TheBlock.
“The Biden administration, particularly the SEC, had gotten into a situation where it couldn’t get a regulatory framework and was using action through the courts. That was becoming more challenging, frankly. So there is a gap there in terms of having a consistent regulatory framework, but we don’t know what that’s going to be.”
While stablecoins are being considered for stricter oversight, Bailey also confirmed that the BoE is still actively exploring a central bank digital currency (CBDC), though no definitive timeline for a UK digital pound has been provided.
Bitcoin’s Role in the UK’s Financial System Still Unclear
While stablecoins may find a place within the UK’s financial system under stricter regulations, the Bank of England remains skeptical about Bitcoin’s role. Governor Andrew Bailey categorized Bitcoin under what he called the “unbanked crypto world”, arguing that its volatility and lack of intrinsic value make it unsuitable as a reserve asset or viable form of money.
“We have yet to see any fundamental use case that would warrant Bitcoin’s inclusion in a regulated financial system,” Bailey stated.
He emphasized that Bitcoin remains a high-risk investment, purely driven by speculation rather than utility in payments or monetary stability.
However, Bailey acknowledged a shift in perception regarding crypto investments, recognizing that investors are increasingly incorporating Bitcoin into diversified portfolios.
“I understand that people will take a portfolio approach to investing in these assets, as long as they understand the risks involved,” he added.
Despite the BoE’s reluctance, several UK firms have started exploring the possibilities of offering Bitcoin-related financial products.
BoE Remains Cautious on a Digital Pound
Governor Bailey confirmed that the Bank of England (BoE) is still exploring the potential launch of a central bank digital currency (CBDC), but emphasized that the institution is taking a measured approach. Speaking on the matter, he noted that there is a “big difference” between a CBDC and stablecoins, and that the BoE is working closely with the UK government to assess the necessity and viability of a digital pound.
The BoE’s Digital Pound Lab, scheduled to launch later this year, will serve as a research initiative for shaping the design phase of a potential CBDC. However, Bailey remained non-committal on whether the UK will proceed with a full-scale rollout, suggesting that further research, regulatory considerations, and public consultations are still required before a final decision is made.
