Stablecoins Offer ‘Efficiency and Functionality’ in Payments, Says Bank of England

“The question is not whether but how we should develop the machinery for tokenized transactions to settle in central bank money,” says Bank of England’s John Cunliffe


lazyllama/Shutterstock modified by Blockworks


Stablecoin use cases — specifically stablecoins for payments — were likened to the evolution of the iPhone by Bank of England Deputy Governor John Cunliffe in a recent speech.

Alongside the digital pound, which the Bank of England (BOE) is currently working on, Cunliffe said that stablecoins for payments are one of four focus areas for the BOE when it comes to digital assets. 

Stablecoins offer “the possibility of greater efficiency and functionality in payments,” according to Cunliffe. However, because they sit outside of regulations at present, there is a slim likelihood that any of the current offerings would pass the standards that an entity such as the BOE would set. 

“Systemic stablecoins will need to be backed with high quality and liquid assets to be able to meet these expectations and standards, as set out by the Financial Policy Committee,” Cunliffe said in the speech. The BOE is working on a regulatory framework that would focus on stablecoins used for payments. 

In May of last year, UK regulators proposed regulatory oversight of payment systems, such as stablecoins, where “deficiencies in its design or disruption to its operation may threaten the stability of the UK financial system” should fall under the BOE.

According to Cunliffe, there is also misunderstanding of the BOE’s approach to digital assets.

“The question is not whether but how we should develop the machinery for tokenized transactions to settle in central bank money — in other words what will provide the most efficient, effective and fastest route to this end, given our current starting point,” he said. 

The possible regulation that Cunliffe refers to is similar to what United States policymakers are working on. 

TerraUSD, an algorithmic stablecoin that was pegged to the US dollar through LUNA, infamously lost its dollar peg and collapsed, wiping out billions of dollars and starting a domino effect that would lead to the bankruptcies of Three Arrows Capital as well as crypto lenders Voyager and Celsius. 

The draft of a stablecoin regulation bill, which was published ahead of a hearing on Wednesday, April 19, showed that lawmakers appear to be on the same page as the BOE. New algorithmic stablecoins, which are based on a secondary token, would face a two-year moratorium.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg


In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.


BUZZ holds shares of Coinbase, Robinhood and MicroStrategy


Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile


The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally


While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders


Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume


DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit