The Bank of England has distributed proposed rules for the issuance of stablecoins, which have pleased some insiders.
Chillimint co-founder and MD Andrew Jones says this is indicative that stablecoins are becoming a story more about trust than technology. ChilliMint is a consultancy focused on payments, Fintech, retail banking, and financial services.
In the US, stablecoins are emerging as the future of payments and value transfer. Less crypto, really, but more about speed and cost in a secure environment. Advocates also note the benefit of stablecoins in buttressing fortress dollar, as issuers must maintain reserves, mostly in US Treasuries.
Jones says that stablecoins have stopped looking like a crypto story and started looking like a payments story.
“A few years ago, most of the conversation was about the technology. Faster settlement. Programmability. Blockchain. New rails. But the further stablecoins move into the mainstream, the less people seem to care about the technology and the more they care about the questions payments people have been asking for decades,” says Jones. “A currency needs to be universally understood if it is to be fit for purpose. Most people don’t know where stablecoins reserves are held, who’s responsible if something goes wrong, who do I call when there’s a problem, or how to use one in the first place.”
The Bank of England’s framework is significant because it is more about creating the conditions for trust and less about the tech details, says Jones. For users, the most important question is “Can I rely on this?”
He posits that stablecoins are not heading toward a single model as there is MiCA in the EU, the US, and now the UK. He sees it as redrawing borders, not removing them.
“Deciding who carries risk, who provides oversight, and how trust is maintained at scale is a much bigger [challenge].”
Stablecoin success will depend on adopting many of the same principles as those used by current payments and transfer rails.
“Because in payments, people rarely remember what happens when everything goes right. They remember what happens when something goes wrong. And that’s where trust is built,” states Jones.