Reeves and Bailey clash leaves Britain’s stablecoin ambitions at risk

The Chancellor’s push to make the UK a hub for tokenised finance is colliding with the Bank of England’s caution over privately issued money, creating a policy standoff that could hand advantage to more decisive overseas regulators unless ministers and the central bank align on acceptable risks.

Britain’s bid to become a leading centre for stablecoins and tokenised finance is running head‑first into a familiar institutional rift: the Chancellor’s push for rapid innovation is colliding with the Bank of England’s caution on the very nature of money. What began as a policy offer to modernise the payments system now risks turning into a policy standoff that could cede ground to rival jurisdictions.

In her Mansion House speech in July 2025 the Chancellor set out an ambitious agenda to “drive forward developments in blockchain technology, including tokenised securities and stablecoins,” and even floated the idea of a digital gilt as part of a wider strategy to modernise UK financial infrastructure and attract firms. That speech framed tokenisation and payments innovation as central to the government’s growth and investment plan and linked the reforms to broader measures on capital requirements and ring‑fencing.

The Bank of England has been more sceptical. In his own Mansion House remarks the governor, Andrew Bailey, warned that while payments innovation is welcome he would “question why we need to introduce a new form of money,” stressing the importance of the “singleness of money” and that any privately issued coins must meet strict tests for trust and resilience. He has made clear to MPs and at public fora that he would require “a lot of convincing” on credible use cases before endorsing wholesale change.

That institutional unease is not merely rhetorical. Ministers and the central bank have butted heads on a series of issues — from whether the Bank should block meetings between fintechs and regulators to disagreements over reforms to the ring‑fencing regime — creating the perception of a broader misalignment between the Treasury’s growth agenda and the Bank’s financial‑stability mandate.

Industry voices warn that this misalignment matters in concrete, economic terms. Trade bodies and payments groups have criticised what they see as prescriptive Bank proposals — notably on holding limits and asset‑backing requirements — that they fear would deter issuance and innovation, undermine London’s competitiveness and favour incumbent systems. Kunal Jhanji, partner at Boston Consulting Group and global lead for payments infrastructure, told City A.M. that clarity of communication is vital and that “everyone needs to sing from the same hymn sheet,” arguing that alignment across government, the Bank and regulators is a precondition for success.

Those warnings arrive against a backdrop of rapid market growth. Analysis by consulting firms shows stablecoin market capitalisation expanded sharply — rising materially in 2024 and further into 2025 — while transaction volumes reached many trillions of dollars last year, with a non‑negligible share already linked to real‑world payments. Industry specialists say economic turbulence and demand for dollar‑denominated, programmable payment instruments have pushed investors and corporates towards these instruments as a faster, borderless complement to legacy rails.

At the same time, regulatory certainty abroad is accelerating institutional adoption. The EU’s Markets in Crypto‑Assets framework created a pan‑European rulebook requiring licensing and robust asset‑backing, and in the United States lawmakers have advanced targeted federal legislation to create a legal regime for dollar‑pegged payment stablecoins. That US bill sets out issuer permissions, one‑to‑one reserve backing in liquid assets, regular disclosures and supervisory arrangements designed to give market participants clarity and confidence.

Corporate and incumbent financial players are already moving. Large banks and payments networks have rolled out pilot projects or new token initiatives aimed at integrating stablecoins into existing flows: some institutions have developed private token systems for institutional settlement and global payments networks have announced partnerships to explore mainstream stablecoin use across merchant and card rails. Those moves underline industry expectations that regulatory frameworks — where they exist — unlock investment and commercial rollout, even as companies stress that practical implementation will depend on compliance, security and supervisory clarity.

For the UK the immediate test is whether ministers and the Bank can reconcile innovation‑led ambitions with the Bank’s stability requirements without deterring the very firms the policy is meant to attract. The government and City regulators have signalled further action — the City regulator’s final rules on stablecoins are expected in 2026 and the Treasury is pressing ahead with a National Payments Vision — but industry leaders say speed and a co‑ordinated signal from all authorities will be decisive. As one payments expert put it to City A.M., Britain should aim not to be first but to be “a smart, fast follower”; to do that, the Chancellor and the central bank will need to agree which risks are tolerable and which must be eliminated before market development can proceed at scale.

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Source: Noah Wire Services

Noah Fact Check Pro

The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.

Freshness check

Score:
8

Notes:
The narrative presents recent developments, including Chancellor Rachel Reeves’ Mansion House speech on 15 July 2025 and Bank of England Governor Andrew Bailey’s comments on stablecoins. The earliest known publication date of substantially similar content is 13 August 2025. The report includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. The content is not republished across low-quality sites or clickbait networks. The narrative is based on a press release, which typically warrants a high freshness score. ([gov.uk](https://www.gov.uk/government/speeches/rachel-reeves-mansion-house-2025-speech?utm_source=openai)) No discrepancies in figures, dates, or quotes were found. No similar content appeared more than 7 days earlier. The report includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged.

Quotes check

Score:
9

Notes:
The direct quotes from Chancellor Rachel Reeves and Governor Andrew Bailey are consistent with their public statements. No identical quotes appear in earlier material, indicating potentially original or exclusive content. No variations in quote wording were found.

Source reliability

Score:
8

Notes:
The narrative originates from City A.M., a reputable UK business news outlet. The report cites official speeches from Chancellor Rachel Reeves and Governor Andrew Bailey, which are verifiable online. No unverifiable entities are mentioned.

Plausability check

Score:
8

Notes:
The claims about the clash between Chancellor Reeves and Governor Bailey over stablecoin regulation are plausible and align with known tensions between the Treasury and the Bank of England. The report lacks supporting detail from other reputable outlets, which is a concern. The narrative includes specific factual anchors, such as names, institutions, and dates. The language and tone are consistent with UK financial reporting. The structure is focused and relevant to the claim, without excessive or off-topic detail. The tone is formal and appropriate for the subject matter.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary:
The narrative presents recent developments regarding the clash between Chancellor Rachel Reeves and Governor Andrew Bailey over stablecoin regulation. The content is fresh, with no significant discrepancies or signs of disinformation. The quotes are consistent with public statements, and the source is reliable. While the report lacks supporting detail from other reputable outlets, the specific factual anchors and consistent tone support a high confidence in the assessment.