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

article-image

lazyllama/Shutterstock modified by Blockworks

share

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.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /