UK Prioritizes Tokenization Over Stablecoins in Crypto Regulation Push

Core Insights - The Bank of England (BoE) is prioritizing tokenization in its digital finance strategy while limiting the use of stablecoins [1][7] - Governor Andrew Bailey has shifted his perspective on stablecoins, recognizing their potential but still advocating for tokenization as a superior innovation [5][7] Tokenization Strategy - The BoE is focusing on tokenized bank deposits rather than stablecoins, with major UK banks like HSBC, NatWest, Lloyds, and Barclays piloting tokenized deposits for various applications [7][8] - The central bank's approach aims to keep money within the regulated banking system, enhancing financial stability [5][7] Stablecoin Regulation - The BoE plans to impose limits on stablecoin holdings, allowing individuals to hold between £10,000 and £20,000 ($13,400–$26,800) and companies up to £10 million [2] - Exemptions for certain crypto firms, such as exchanges and custodians, are expected, indicating a more flexible regulatory stance [3] Digital Securities Sandbox - The BoE intends to modify its Digital Securities Sandbox to permit limited use of regulated stablecoins for settlement, allowing for real-world testing of these assets [3][4]