UK scales back stablecoin capital rules to boost crypto competitiveness

The shift follows extensive consultations where industry leaders argued that the initial 2% threshold was prohibitively high. David Geale, the regulator's executive director for payments and digital finance, acknowledged that the feedback indicated the entry bar was misaligned with market realities. By recalibrating these demands, the UK aims to balance consumer protection with the need to attract digital asset firms, particularly as global jurisdictions race to define their crypto policies.

Beyond capital ratios, the FCA has loosened rules regarding redemption timelines and public disclosure obligations. Trading platforms will also see a more tailored approach, with regulations designed to better mirror the specific mechanics of crypto markets. While these changes take effect in October 2027, the scope remains focused: the rules apply primarily to sterling-denominated tokens. Systemic assets, meanwhile, will face more rigorous oversight from the Bank of England. Despite the concessions, some industry voices argue the 1% mandate remains a hurdle, especially as firms weigh the UK’s framework against emerging, potentially more lenient standards in the United States.