The Bank of England now treats stablecoins as a 'new form of money,' a top official said, while the central bank remains neutral in the ongoing debate between tokenized deposits and stablecoins. Sasha Mills, an executive at the Bank of England, laid out the position, signaling the regulator's evolving view of digital currencies. The move places the BoE among a growing number of central banks grappling with how to classify and oversee private digital assets that aim to hold a steady value.
What 'New Form of Money' Means
Calling stablecoins a new form of money is a step beyond earlier classifications. It suggests the BoE sees them as more than just a crypto-trading tool — they could function like cash or bank deposits in the broader economy. That recognition comes with implications for oversight, consumer protection, and financial stability. Mills didn't announce new rules, but the label itself sets a tone for future regulation.
Neutrality in the Tokenized Deposits vs. Stablecoins Debate
The BoE is deliberately not picking sides between tokenized deposits — digital versions of traditional bank money — and privately-issued stablecoins. Tokenized deposits are backed by central bank reserves or commercial bank liabilities, while stablecoins are typically backed by a basket of assets. By staying neutral, the central bank leaves room for both models to develop. That flexibility matters because the UK is still shaping its digital currency framework, and the outcome could affect how banks and crypto firms compete.
The timing coincides with wider efforts in the UK to regulate the crypto sector. The Treasury has been consulting on stablecoin rules, and the BoE's stance adds clarity — even if it doesn't pick a winner. For stablecoin issuers, being labeled a form of money could mean stricter requirements, like reserve transparency and redemption rights. For banks pushing tokenized deposits, the neutrality means they won't get an automatic regulatory advantage.
Mills' comments don't resolve the bigger question: how the BoE will ultimately treat stablecoins in practice. The central bank's next steps — likely a consultation paper or draft rules — will fill in the details. For now, the market has a clearer signal that stablecoins are here to stay, but so is regulatory scrutiny.
