Bank of England boss warns banks against issuing stablecoins amid global scrutiny

Bank of England Governor Andrew Bailey has warned the world's largest banks away from issuing their own stablecoins, denouncing the crypto assets as threatening to financial stability and the nature of money itself in a new interview with British paper The Times. 

Bailey said instead that the world's central banks should pursue tokenized deposits, digital versions of traditional money, rather than adopting private sector stablecoins or issuing central bank digital currencies (CBDCs). 

"I would much rather [banks] go down the tokenised deposit streets and say, how do we digitise our money, particularly in payments,” Bailey told The Times.

Bailey, who is also the chair of post-2008 watchdog Financial Stability Board, also warned investors away from buying Bitcoin. "It’s not money, it doesn’t have the function of money, and if you’re going to buy it, please buy it with your eyes open," Bailey said. The price of BTC hit a new all-time high on Sunday at around $119,450, according to The Block's Bitcoin Price page. 

Bailey's comments come shortly before the U.S. House of Representatives and Senate are set to debate crypto legislation as part of the House GOP-declared "Crypto Week." Both chambers of Congress will likely focus on a version of the GENIUS Act passed by the U.S. Senate, which facilitates rather than restricts the ability of companies and banks to issue stablecoins, though the representatives may also consider a wider market bill and a bill that would block the Federal Reserve from issuing a CBDC.

"I would say that the US is going towards stablecoins. The European Central Bank is going towards central bank digital currency. Neither of them is going towards tokenising deposits," Bailey said. 

Bailey made similar comments about crypto to The University of Chicago Booth School of Business in London in February, The Block previously reported, describing the world of non-stable cryptocurrencies as "pure investment risk." 

As for stablecoins, Bailey had hinted that he'd support a firm regulatory hand. "I think we will have to set a high bar [for stablecoins] because the expectations are that people using things for payments, are appropriately set like money," Bailey said. 

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