UK FCA Eases Stablecoin Rules Following Industry Backlash

The UK's Financial Conduct Authority (FCA) has performed a significant about-turn on its stablecoin proposals, halving planned capital requirements from 2% to 1%.

This move follows sustained industry backlash, with David Geale, the FCA lead for payments and digital finance, conceding the original demands were likely too high for the current market.

Beyond the capital buffer reduction, the regulator has also softened its stance on redemption timelines and public disclosure obligations, with rules set to take effect in October 2027.

However, these regulations focus only on stablecoins pegged to the British pound, representing a fraction of the global market.

The Bank of England has mirrored this pragmatism, recently diluting its own unpopular proposals for systemic stablecoins.

Whether these adjustments signal the FCA is listening to market participants or trying to align with the more crypto-friendly US regime remains unclear, as US rules drawn last year avoided a rigid, one-size-fits-all capital requirement for stablecoin issuers.

In contrast, the EU remains more restrictive, with the Markets in Crypto Assets (MiCA) regulation setting own-funds requirements for significant stablecoin issuers as high as 3%, drawing opposition from major players like Tether.

The European Central Bank has been a vocal detractor of stablecoins, with President Lagarde calling them a direct threat to financial stability, as the ECB prepares to launch the digital euro.