TL;DR:
- The UK’s FCA reduced capital requirements for stablecoin issuers from 2% to 1% of the total value issued.
- The new British standard falls below the 2% required by the European Union’s MiCA regulation for similar assets.
- The Bank of England had already reversed its proposal to cap stablecoin balances at £20,000 per individual.
The Financial Conduct Authority (FCA) of the United Kingdom halved the capital requirements for stablecoin issuers, as part of the formal regulatory guidance document recently published by the body. According to the text, issuers will be required to hold the equivalent of 1% of the total value of stablecoins in circulation, down from the 2% proposed at an earlier stage.
The FCA itself justified the change by noting that it makes the prudential framework “more proportionate for larger issuers, without compromising the overall soundness of the regime.” The regulator also indicated that its goal is to simplify the core elements of the scheme to make it more workable in practice.
A Direct Advantage for Stablecoin Issuers
The new standard places the United Kingdom below the equivalent threshold set by the European Union’s Markets in Crypto Assets (MiCA) regulation, which fixes that requirement at 2%. The difference is significant: it implies a direct competitive advantage for issuers operating under British jurisdiction, freeing up capital that would otherwise be immobilized as reserve backing.
The FCA measure is part of a sequence of regulatory relaxations. Weeks earlier, the Bank of England had reversed its proposal to impose a cap of £20,000 —approximately $26,500— on the balance an individual could hold in stablecoins, a restriction that had drawn pushback from the industry.
Changes for Exchanges
The document also introduces changes for crypto exchanges. Under the new rules, platforms will be required to allocate 40% of their operating capital as coverage against potential losses and apply a 40% haircut on the value of their collateral in lending or trading operations with third parties.
The world’s major financial jurisdictions have spent several years defining regulatory frameworks for crypto assets, and stablecoins have received particular attention for their potential to integrate into traditional payment systems.
