Mills: BoE treats stablecoins as money, won't pick winner between tokenized deposits. Stance pressures issuers, legitimizes asset class for institutions.
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Bank of England executive director for financial market infrastructure Sasha Mills confirmed on Wednesday that the central bank now treats stablecoins as a "new form of money" – a statement that carries immediate regulatory weight for crypto issuers and their institutional trading counterparties. Mills said the Bank is "not picking winners" in the debate between tokenized deposits and stablecoins, signaling that both instruments will eventually operate under a unified money-like framework rather than a two-tier system.
The immediate market interpretation – that the Bank of England is turning accommodative on stablecoins – needs a sharper read. Mills’s phrasing explicitly avoids endorsing any single technology. Tokenized commercial bank deposits remain on the table, and the central bank’s digital pound project, if revived, would compete directly with private stablecoins for settlement share.
The better read is that the Bank of England is laying the groundwork for an interoperable money framework where regulated stablecoins, tokenized deposits, and a potential retail CBDC all share a common legal status. That means stablecoin issuers seeking UK operation will face the same prudential standards as banks – capital requirements, liquidity buffers, and full backing by central bank reserves for any systemic designation. For traders, this removes the binary bet on whether stablecoins will be banned and replaces it with a question of execution risk: which issuers can meet bank-grade compliance and which will be forced out.
Treating stablecoins as money is not semantic. Under UK law, money holds special status in payments, settlement finality, and financial market infrastructure. Mills’s statement implies that sterling-pegged stablecoins could eventually access Bank of England settlement accounts, a privilege currently reserved for commercial banks and select non-bank payment providers. If that path materialises, a Circle-issued sterling stablecoin would settle directly on the central bank’s ledger, bypassing the commercial banking layer and compressing costs for institutional crypto market analysis desks.
The tactical read is that this raises the compliance bar significantly. A “money” designation invites the Financial Conduct Authority and the Prudential Regulation Authority into daily oversight, with all the transparency and audit requirements that entails. For Tether, which still faces opacity questions around its reserves, gaining full UK passporting would require a level of disclosure that could unsettle its existing user base. For Circle, which has actively pursued regulatory-first positioning, the statement validates its business model. It does not guarantee a swift licence, however, given the rigorous approval process.
The sector read-through starts with UK-facing crypto exchanges and brokers. If the Bank of England treats stablecoins as money, platforms like eToro, which already hold FCA registration, will need to ensure their stablecoin operating model meets the new standard. That could accelerate the shift from unregulated offshore stablecoins toward fully compliant onshore instruments – a development that trading desks positioning for institutional-grade liquidity will have to price in now, before formal rules land.
Mills’s neutral stance on tokenized deposits and stablecoins removes a key source of uncertainty. Major UK banks have been exploring tokenized deposit platforms for wholesale payments. Until now, lack of regulatory clarity had kept these projects in sandbox mode. With the Bank signaling that both instruments are viable components of a future money system, bank tokenization programmes can now move to production without the risk of being pre-empted by a stablecoin-only regime.
For the broader crypto market, the read-through is that the UK is aligning with the EU’s MiCA framework, which also classifies stablecoins as electronic money, while adding a distinctive central bank settlement option that MiCA does not mandate. The divergence could create a UK-specific liquidity hub for sterling stablecoin transactions, pulling Bitcoin and Ethereum trading pairs onto compliant venues that offer direct fiat ramps without traditional banking delays.
The next decision point is the Bank of England’s formal consultation on a stablecoin regulatory regime, expected later this year. Until then, the market will trade the gap between the political signal – stablecoins are here to stay – and the operational reality that only the most capitalised and transparent issuers will survive the licensing process. The smart money is not buying the stablecoin narrative wholesale; it is mapping which trading infrastructure and custody providers already comply with bank-grade standards and will therefore capture the settlement flow when the rules go live. For anyone building a UK crypto watchlist, the immediate filter is clear: follow the balance-sheet quality of each stablecoin issuer and the regulatory status of each exchange that offers sterling pairs, because the Bank of England just made them part of the financial plumbing – not the periphery.
Drafted by the AlphaScala research model and grounded in primary market data – live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.