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The governor of the Bank of England, Andrew Bailey, has changed his mind about stablecoins. He now thinks that they should be used in the UK financial system, but only with strict oversight. This is a major turnaround from how he used to feel. This is becoming a bigger concern because 12% of adults, or seven million individuals, possess crypto. The UK government is making adjustments to make the legal status of digital assets clearer, such as adding protections for inheriting bitcoins. Fraud costs the globe £4.01 trillion, and 41% of all crimes in the UK are fraud-related. These changes are aimed to find a middle ground between security and new ideas. The Property (Digital Assets etc) Bill will change the way people inherit things, and Bailey’s new job will transform the way cryptocurrencies work in the UK. The technology has already been applied in many positive ways to industries such as finance, retail and also gaming and spread betting platforms, so its natural the government would also want to embrace the new technology too.
Bailey’s Changing View on Stablecoins
Andrew Bailey has changed his opinion about stablecoins, which are digital tokens that are linked to regular currencies like the pound. He has been against cryptocurrencies for a long time. On October 1, 2025, Bailey wrote in the Financial Times that “it would be wrong to be against stablecoins as a matter of principle.” He suggested that if stablecoins were used a lot for payments, they should be treated as conventional money. This includes protections for depositors, insurance, ways to settle disputes, and access to the Bank of England’s reserve facilities. These features keep things stable without the need for crypto exchanges.
Bailey’s adjustment comes after fintech luminaries like Janine Hirt from Innovate Finance said that the Bank of England’s tight policies, including as limits on how much money can be held and bans on interest payments, were “killing” the UK’s stablecoin aspirations. Bailey told the Times in July 2025 that he wasn’t sure if stablecoins were needed because they could drain money out of banks and make it tougher to get credit. He now sees a difference between tools for trading and ways to pay. He offers a consultation brief to clarify how stablecoins that satisfy certain conditions might access BoE accounts. This makes stablecoins more like “money.”
Many people have changed their minds about this since the GENIUS Act was implemented in the US in July 2025. It needs to be backed up 1:1 by low-risk assets like dollars to be safer. Bailey’s statements suggest that he is open to working with others, which is different from how Nigel Farage of Reform used to call him a “dinosaur.” Hirt liked the “greater openness,” but he said that substantial changes were needed to protect the UK from slipping behind. The FCA’s final guidelines for stablecoins, which will come out by the end of 2026, will make this better. In April 2025, they will put out a draft law that tells exchanges and custodians what they have to do.
The Property Bill’s changes to crypto inheritance to make it safer
The UK has a significant problem: how to pass on digital things like bitcoins and NFTs. As stablecoins become more popular, this is becoming more critical. The Property (Digital Assets etc) Bill, which was introduced on September 11, 2024, makes it clear that these “things” constitute personal property in England and Wales. This makes it obvious what rights and remedies owners have that weren’t clear before. This amendment, which was adopted because of the Law Commission’s 2023 study, makes sure that crypto can be part of estates, be available to creditors, or be used as collateral for loans. This keeps losses from happening because the situation isn’t clear.
Digital assets didn’t fit into normal property categories like physical items or rights like shares, which made it easy for anyone to mess with them or dispute over them. The Bill creates a “third category” for digital and electronic items, but it doesn’t have a clear description, thus common law can alter. It comprises crypto-tokens, NFTs, and carbon credits, which are part of £250 billion worth of mergers around the world that are governed by English law. This means that for the seven million people in the UK who possess crypto (12% of adults, according to the FCA’s 2024 poll), their assets will be taxed at 40% on inheritance tax (beyond the £325,000 threshold), and executors won’t be able to collect refunds.
Stuart Downey of the law company TWM Solicitors claimed that families could lose millions if the law doesn’t change. This is because crypto is decentralised and private keys make it hard to get to. “The problem is finding and getting to the assets,” he stated. When the Bill wins Royal Assent, it will say that wills must mention digital assets so that the people who get them know what to do. People who live outside the UK have to pay UK taxes on things they own there. The change allows the UK keep involved in 40% of business arbitrations around the world.
The £4.01 trillion shadow of fraud is the bigger crypto problem
The National Crime Agency says that fraud expenses are going up quickly. £4.01 trillion has been lost around the world, and 41% of crimes in the UK are fraud. To stop this from happening, Themis bought Pasabi on October 3, 2025. The new platform would employ AI to uncover fraud in due diligence and money laundering. “Fraud is the biggest cause of money laundering in the world,” said CEO Dickon Johnstone. Pasabi’s agentic AI spots weird things as they happen, and banks and insurers use it to discover unlawful flows, which Interpol estimates only happens 2% of the time.
Regulatory penalties highlight where things are wrong. The FCA penalised Barclays £42 million in July 2025 for not completing enough due diligence, and Monzo £21 million in September for having accounts that were too risky. McKinsey says that 70% of compliance time is wasted on manual tasks, but AI like Pasabi’s cuts down on false positives by 40%. The National Security and Investment Act permitted the acquisition, which provides Themis more power. However, Hirt warned that changes need to be made to match the US GENIUS Act’s 1:1 backing standards.
Changes to inheritance laws: Keeping digital wealth safe
The Property Bill tackles the problems with crypto inheritance, including when you lose your keys and can’t get your possessions back. TWM’s Downey said, “Even if there was a search tool, it probably wouldn’t work for private wallets.” The last portion of the bill protects against theft or disagreements by treating bitcoin like property in an estate. If you don’t dwell in the UK, situs rules apply and tax UK-based assets. The Law Commission said that the change makes the UK’s £250 billion M&A jurisdiction stronger. English law governs 40% of arbitrations in this area.
How Stablecoins Will Be Regulated in the Future
Bailey’s change of heart, from being worried in July (“I couldn’t understand their need”) to supporting them in October, shows that the Bank of England should be permitted to accept stablecoins as payment. The consultation paper, which will be available soon, will go into detail on risk-free backing, insurance, and resolution strategies. The US GENIUS Act is federal, but Hirt argues the UK should avoid limits to stay competitive. The FCA’s rules for 2026, which are based on drafts from April 2025, will govern exchanges and custody. A CRYPTOPRU sourcebook will use MiFIDPRU’s K-factors to figure out how much capital it needs.
The Two Sides of Crypto: New Ideas and Risk
Stablecoins and cryptocurrencies could be valuable, but they also come with fraud risks that cost the world £4.01 trillion. Themis-Pasabi’s AI might make billions by looking at social media and transactions, but it is very crucial to grow in a moral way. “Trust is everything in financial services,” Johnstone said. The Bill’s property status makes it clear who will get what, but wills must say how to get to the assets. “If you think digital assets will be passed down automatically, they might be lost forever,” Downey added.
A Fair Way to Move Forward
Bailey’s change of heart and the Property Bill show that the UK is open to crypto as long as it is safe. A City AM study from May 2025 found that 49% of millennials in the UK are interested in digital assets. Changes need to protect these assets while yet letting them grow. The FCA’s Q3 2025 discussions and the government’s 2025 prospectus will help shape this, but it has to be more like the US. As fraud rises, AI solutions like Pasabi’s give us hope. But customers need to be alert and change their passwords and report scams. The UK, which has 40% of the arbitration industry, may lead if reforms make things simpler and safer.
