The UK’s Financial Conduct Authority has slashed planned capital requirements for stablecoin issuers from 2% to 1% following intense industry pushback. David Geale, FCA lead for payments and digital finance, acknowledged the original demands were excessive for current market conditions. The regulator has also relaxed redemption timelines and public disclosure requirements, with the new framework taking effect in October 2027. These rules apply exclusively to pound-pegged stablecoins, representing a small slice of the global market.
The Bank of England has similarly softened its approach to systemic stablecoins. The FCA’s shift appears influenced by either genuine industry feedback or competition with America’s more flexible crypto stance, which avoids rigid capital requirements. Meanwhile, the EU maintains a hardline position under MiCA regulations, demanding up to 3% capital reserves for significant issuers. Tether has refused to comply with the EU framework entirely, while ECB President Lagarde continues labeling stablecoins a threat to eurozone stability.
FXnCO Insight
UK stablecoin operators gain regulatory breathing room until 2027, creating potential competitive advantage over EU-based issuers facing stricter MiCA compliance.
Source: Finance Magnates