Bank of England Governor Andrew Bailey has warned that international regulators will need to 'wrestle' with the United States over global rules for stablecoins, which are largely denominated in and backed by U.S. dollars. As reported by Reuters, Bailey emphasized that 'If we want stablecoins to be part of the architecture of payments globally, they're only going to work if we have international standards.' He added that 'That, I think, is going to be a coming wrestle with the [U.S.] administration,' highlighting the cross-border regulatory tensions surrounding stablecoins. The Financial Stability Board's mandate to coordinate macroprudential oversight places additional pressure on harmonized rules that can withstand cross-border capital flows and potential liquidity stress scenarios.
Senator Bernie Moreno has publicly accused major U.S. banks of lobbying against stablecoin legislation ahead of a key Senate Banking Committee vote this week. According to reports from AMBCrypto, Moreno called the banking industry a 'cartel' attempting to protect its control over deposits and payment infrastructure. The comments followed the circulation of a letter from American Bankers Association President and CEO Rob Nichols urging bank executives to contact lawmakers before the committee votes on digital asset legislation. The American Bankers Association supports digital asset legislation and responsible guardrails but argues that additional changes are necessary to close what it described as a 'stablecoin loophole'.
The stablecoin sector has grown rapidly, with CoinGecko estimates placing the market at more than $317 billion in value, reflecting a broad mix of USD-pegged tokens and liquidity arrangements anchored in U.S. Treasuries and dollars. As reported by Reuters, the market's USD-centric backing structure creates interdependencies with banking and custody infrastructure. In stressed conditions, convertibility and liquidity become central concerns for risk officers, compliance teams, and regulators seeking to prevent liquidity spirals or runs that could spill over into the broader financial system. The United Kingdom's stated aim of imposing stringent convertibility rules further underscores the policy divergence that international regulators must reconcile to avoid systemic fragmentation.
In his letter, Nichols warned that the current proposal could 'incentivize the flight of bank deposits into payment stablecoins' and that the bill does not adequately prevent crypto companies from offering interest-like rewards on stablecoins. As reported by AMBCrypto, the ABA framed stablecoins as a potential risk to economic growth and financial stability if consumers begin shifting funds away from traditional bank accounts. Banks rely heavily on customer deposits to fund lending activity and generate revenue, making stablecoins a direct competitor. The legislative process remains fluid, with lawmakers weighing the balance between consumer protections and the attractiveness of the U.S. regulatory environment for digital-asset firms.
Paul Grewal from Coinbase pushed back against the ABA's lobbying effort, suggesting crypto firms had already compromised during negotiations. According to AMBCrypto, Grewal wrote on X that 'You got 'idle yield' killed' and referenced negotiations surrounding whether stablecoin issuers could offer interest-like rewards to users. Yield-bearing stablecoins have become a major concern for banks because they could compete directly with savings accounts and money market products. The recent version of the related bill would ban stablecoin rewards on idle balances, while permitting other forms of customer rewards, as reported by Reuters.
