Recent speeches given by the PRA and the Bank of England (BoE) have given further insight into the direction of travel the UK regulators are seeking to take towards credit institutions' engagement with cryptoassets and the developing forms of digital money.
In a speech titled “Innovation and Regulation – striking the balance” by David Bailey (18 June 2025) the PRA confirmed its preference for a cautious yet flexible approach to addressing how regulation should deal with banks’ involvement with cryptoassets, highlighting:
- its commitment to implementing the Basel Committee on Banking Supervision standards on the prudential treatment of banks’ exposures to cryptoassets while waiting to see if its approach can be relaxed over time; as well as
- its desire to ensure that banks that the PRA had previously said should only provide innovations in the form of deposits (for example in tokenised form), can compete openly with non-banks issuing systemic stablecoins.
Andrew Bailey struck a similar note in a speech at the 9th NBU-NBP Annual Research Conference in Kyiv headed “Central Banking in extreme adversity” in which he made it clear that if there are real benefits in digital technology in payments, then his preference would be for those benefits to be seen in commercial bank money in the form of tokenised deposits.
In his view the UK is well on the way to having wholesale central bank digital money in any event, as a natural step from the wholesale electronic money that the UK has had for thirty years, but he remains unconvinced as to the need for a retail CBDC.
He also made it clear that in relation to stablecoins, whilst he thought it possible for the latter to provide assurance of nominal value and pass the test of singleness of money, many of the current versions do not yet achieve that test, and that the focus should be on developing standards that ensure they do.