No regulatory free pass for stablecoins, says Bank of England

London, 10 June 2021 – In a speech given today, senior Bank of England official Christina Segal-Knowles shed further light on the Bank’s approach to regulation of the fast-evolving digital payments landscape, saying that stablecoins will be held “to standards similar to those applicable to existing private money”.

She emphasised that confidence in private money rests on the ability to use it interchangeably with cash. This means that any firm “offering private money on a systemic scale… should be regulated as such”, and held to the same high standards as banks providing other forms of money.

This follows a discussion paper published on Monday, setting out the Bank’s latest thinking on new forms of digital money, including systemic stablecoins and a UK Central Bank Digital Currency (CBDC), and launching a consultation that will run until September 2021.

Simon Youel, head of policy and advocacy at Positive Money, said:

“Stablecoins and other cryptoassets could pose serious risks for financial stability and for consumers, and it’s promising to see that the Bank of England is not giving them a free pass on the rules and regulations that govern other kinds of private money like commercial bank deposits.

“The 2008 financial crisis showed the dangers of a runaway private money system, and with tech giants like Facebook threatening to move into the digital currency space, this is a critical moment for central banks to be setting out a strong response. 

“As well as robust regulation, we also need a Central Bank Digital Currency (CBDC) to ensure that our money and payments system isn’t beholden to private banks, card companies and tech giants.”

Notes 

1. “Stablecoins: What’s Old is New Again”, Bank of England, 10 June 2021: https://www.bankofengland.co.uk/-/media/boe/files/speech/2021/june/stablecoins-whats-old-is-new-again-speech-by-christina-segal-knowles.pdf?la=en&hash=E1D88DB050EB92BA8C581A9C8A967BE7191F776A 

2. “New forms of digital money”, Bank of England, 7 June 2021: https://www.bankofengland.co.uk/paper/2021/new-forms-of-digital-money 

3. Positive Money response to the HM Treasury consultation on a regulatory approach to stablecoins and cryptoassets, March 2021: http://positivemoney.org/wp-content/uploads/2021/06/UK-regulatory-approach-to-cryptoassets-and-stablecoins_-Positive-Money-submission.pdf 

4. Positive Money is a research and campaign organisation working towards a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org.

For more information from Positive Money or to arrange a briefing/interview with a spokesperson, please contact press@positivemoney.org.uk or Anna Pick on 07948802104.