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By James Van Straten, AI Boost|Edited by Sheldon Reback
Jul 14, 2025, 10:04 a.m.
- Bailey advised banks to develop tokenized deposits rather than their own stablecoins to protect the banking system and monetary control.
- The U.S. Genius Act could pave the way for major banks like JPMorgan and Citi to issue stablecoins, deepening the divide between global regulatory approaches.
Bank of England Governor Andrew Bailey warned global investment banks against developing their own stablecoins, highlighting possible threats to financial stability.
Speaking in an interview with The Times, Bailey took a stance that contrasts sharply with U.S. President Donald Trump’s administration’s support for crypto initiatives, which has fueled expectations of a friendlier regulatory climate in the country.
STORY CONTINUES BELOW
Bailey expressed skepticism about stablecoins, which are digital tokens tied to traditional assets like the dollar. He argued that stablecoins do not carry the same safeguards as conventional bank deposits and could siphon money away from the banking system, potentially weakening credit creation and monetary policy control.
“Stablecoins are proposed to have the characteristics of money,” Bailey said. “That money is a medium of exchange. Therefore, they really do have to have the characteristics of money and they have to maintain their nominal value. We are going to have to look at it very closely through that lens. It’s both a financial stability issue and a money issue in that sense.”
Instead, he encouraged banks to explore tokenized deposits, which digitize existing forms of money while keeping them firmly under regulatory oversight. Bailey hinted that the U.K. might be better off enhancing digital banking infrastructure than launching a central bank digital currency (CBDC), as the European Central Bank plans to do in the coming years.
His warnings arrive just as the U.S. Congress considers the Genius Act, a proposal to let commercial banks issue stablecoins. Institutions like JPMorgan and Citi are reportedly preparing for such moves, anticipating a surge in digital finance under looser rules. Cryptocurrencies like bitcoin have soared in value amid speculation over more lenient policies in the word’s largest economy.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.
James Van Straten is a Senior Analyst at CoinDesk, specializing in Bitcoin and its interplay with the macroeconomic environment. Previously, James worked as a Research Analyst at Saidler & Co., a Swiss hedge fund, where he developed expertise in on-chain analytics. His work focuses on monitoring flows to analyze Bitcoin’s role within the broader financial system.
In addition to his professional endeavors, James serves as an advisor to Coinsilium, a UK publicly traded company, where he provides guidance on their Bitcoin treasury strategy. He also holds investments in Bitcoin and Strategy (MSTR).
“AI Boost” indicates a generative text tool, typically an AI chatbot, contributed to the article. In each and every case, the article was edited, fact-checked and published by a human. Read more about CoinDesk’s AI Policy.
