UK and U.S. Align Stablecoin Rules to Prevent Fragmentation, Spur Innovation

The Bank of England has signaled a strategic shift to align its stablecoin regulatory framework with U.S. standards, emphasizing the importance of synchronization between the two nations to foster innovation and stability in the $310 billion industry. Deputy Governor Sarah Breeden, speaking at the SALT conference in London on Nov. 5, confirmed the central bank will publish a consultation paper on Nov. 10—a move that softens earlier, more stringent proposals and reflects growing transatlantic collaboration, according to Reuters.

Breeden's remarks underscored the urgency of harmonizing rules to avoid fragmentation in the global stablecoin market. "It's really important that the U.S. and the U.K. are synchronized," she said, noting ongoing discussions with the Federal Reserve and U.S. regulators. This collaboration follows the September announcement of a joint task force between the two governments to bolster cooperation on digital assets and capital markets, Reuters reported. The U.K. aims to implement a regulatory framework "just as quickly as the U.S.," Breeden added, addressing concerns that the nation might lag after the U.S. enacted the GENIUS Act in July, according to Cointelegraph.

The consultation paper, expected to outline measures for stablecoin issuers, will likely focus on transparency, reserve requirements, and consumer protections. Breeden's comments suggest the Bank of England is pivoting from earlier drafts that proposed stricter capital buffers for stablecoin operators, instead adopting a more flexible approach to encourage innovation while mitigating risks, as Reuters noted. This alignment with U.S. standards could accelerate cross-border adoption of stablecoins, which are increasingly used for payments and financial services.

The U.S. and U.K. have long been at the forefront of digital asset regulation, with the GENIUS Act serving as a benchmark for global frameworks. By mirroring U.S. timelines and policies, the U.K. aims to position itself as a competitive hub for stablecoin innovation without compromising financial stability. However, critics argue that rapid regulatory moves could outpace oversight, leaving gaps in consumer safeguards.

The Bank of England's consultation will be closely watched by market participants, including stablecoin issuers and fintech firms. A balanced approach could attract international investment while ensuring the sector remains resilient to systemic risks. Meanwhile, the U.S. task force's progress will be a key indicator of how transatlantic cooperation shapes the future of digital currencies.