BoE's Bailey Warns of U.S. Stablecoin Regulatory Conflict, Flags 40% Reserve Gap on Friday

According to Reuters, on Friday (May 8), Bank of England Governor Andrew Bailey warned that international regulators face a “coming wrestle” with the U.S. government over stablecoin standards, as Washington promotes dollar-denominated stablecoins as global payments infrastructure without sufficient international coordination.

Bailey highlighted a specific vulnerability: some U.S. stablecoins cannot be readily converted to dollars without routing through crypto exchanges, potentially limiting redemption in a crisis. If dollar-pegged stablecoins become widely used for cross-border payments, he argued, a run could push users toward jurisdictions with stricter convertibility rules like the UK. The UK’s planned regime would require systemic stablecoin issuers to hold at least 40% of reserves in unremunerated accounts at the Bank of England, while the GENIUS Act requires 100% reserve backing but does not mandate direct redemption from issuers.