Bank of England Prepares to Regulate Stablecoins as New Form of Money

The Bank of England has announced its intention to regulate stablecoins as a new form of money, recognizing their increasing importance in financial transactions. According to an executive director at the bank, stablecoins will be treated equally robust as traditional forms of currency, enabling end-users to choose between alternatives such as tokenized deposits and e-money.

The bank's move is part of a broader effort to develop a regulatory framework for stablecoins in the UK. By the end of the year, the Bank of England will begin accepting applications from would-be issuers, with a focus on systemic stablecoins that are widely used in payments. These stablecoins pose risks to financial stability, and as such, will be subject to stricter regulations.

Despite the majority of global stablecoins being denominated in USD, experts predict a growing demand for GBP-denominated stablecoins. The UK's top financial regulator has selected four crypto firms to participate in a risk-free regulatory sandbox, which will inform how the agency shapes stablecoin rules later this year. This move is seen as a step towards supporting innovation and growth in the industry.