Bank of England governor draws a hard line against financial deregulation, with crypto in the crosshairs

Andrew Bailey, Governor of the Bank of England, has a message for anyone hoping the UK will loosen its grip on financial regulation: don’t hold your breath.

Bailey has repeatedly pushed back against the UK government’s appetite for deregulation, arguing that rolling back post-crisis financial rules would be a dangerous trade for marginally faster economic growth. His position puts him squarely at odds with Chancellor Rachel Reeves, who has championed reducing regulatory burdens to make the UK more competitive in global finance. Bailey has specifically flagged crypto assets and stablecoins as areas requiring more scrutiny, not less.

No compromise, no exceptions

In an October 3, 2025 speech, Bailey stated plainly that there is “no compromise between financial stability and stoking growth.”

His core argument is straightforward. The financial regulations put in place after the 2008 crisis weren’t the cause of the UK’s productivity problems. Dismantling them wouldn’t fix those problems either, and could instead create new systemic vulnerabilities.

Bailey specifically warned against loosening rules at a time when new risk vectors, particularly crypto assets and artificial intelligence, are entering the financial system at speed.

As of mid-2026, Bailey has continued making public appearances focused on financial stability, with no indication of new deregulation clashes reported.

Stablecoins should play by bank rules

Bailey has called for widely used stablecoins to be treated similarly to traditional money, complete with depositor protections analogous to those in conventional banking.

He has also pushed for global alignment on crypto regulation, arguing that digital assets don’t respect national borders and neither should their oversight frameworks. This echoes similar calls from the Financial Stability Board and the Bank for International Settlements.

The political tension underneath

Chancellor Reeves has made financial sector competitiveness a policy priority, launching initiatives specifically designed to reduce regulatory friction for businesses operating in the UK.

Bailey’s counterargument draws on examples including the 2008 financial crisis, the Terra/Luna collapse, and the FTX implosion to illustrate what happens when oversight fails to keep pace with financial innovation.

What this means for crypto investors and the UK market

The push for global regulatory harmonization adds another layer of complexity. If Bailey’s vision of internationally aligned crypto rules gains traction, stablecoin issuers in particular should be watching closely, because depositor-protection requirements could fundamentally change the economics of issuing and maintaining a stablecoin.

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