Bank of England: Stablecoins Could Strengthen US Dollar
BITmarkets Team
Sep 22, 2026
Speaking at Queen’s University Belfast, Wilkins said dollar-denominated stablecoins could reinforce the dollar by simplifying cross-border settlement, making dollar-linked assets more accessible outside the United States and increasing purchases of US Treasurys used to back stablecoin reserves.
Stablecoin issuers become major treasury buyers
Large stablecoin issuers have already emerged as significant holders of US government debt. Tether’s USDT and Circle’s USDC collectively held nearly $150 billion in Treasury bills at the end of 2025 and purchased approximately $33 billion during the year, according to data cited by Wilkins.
However, she also highlighted potential risks associated with this growing connection between stablecoins and the Treasury market. If stablecoins reach sufficient scale, a wave of large redemptions could require issuers to sell Treasury bills to meet withdrawals, potentially increasing volatility during periods when the market is already under pressure.
Stablecoin adoption continues to expand, with more than $300 billion now in circulation. The market remains heavily dominated by dollar-backed assets, which represent approximately 98% of stablecoin value and give the US currency what Wilkins described as a “considerable first-mover advantage.”
UK seeks to expand pound-based stablecoins
Stablecoins denominated in British pounds have gained significantly less adoption, although UK regulators have taken several steps this year to support their development. The Financial Conduct Authority has been testing prospective stablecoin issuers through a dedicated regulatory sandbox and finalized its rules for UK stablecoin issuance in June.
The Bank of England has also continued experimenting with digital forms of money, including a recent trial examining whether stablecoins and a simulated digital pound could operate together for cross-border trade payments.
Bank of England adjusts its stablecoin approach
The developments come as the Bank of England adopts a more accommodating stance toward stablecoins following concerns from the industry that earlier proposals could restrict innovation. With dollar-backed stablecoins already dominating the global market, UK regulators are increasingly exploring how regulated sterling-based alternatives and other forms of digital money could fit into the country’s financial system.
Sources:
https://cointelegraph.com/news/stablecoins-us-dollar-dominance-treasury-demand-boe
