Key facts
- UK's FCA has set out formal guidance for cryptocurrency regulations.
- Capital requirements for stablecoin issuers will be reduced to 1% of their total stablecoin value in circulation.
- This 1% requirement is lower than the 2% stipulation under the EU's MiCA regulation.
- The FCA aims to simplify the framework for crypto exchanges.
- The Bank of England abandoned plans to cap individual stablecoin holdings at £20,000.
The U.K.'s Financial Conduct Authority (FCA) has announced a reduction in the proposed capital requirements for stablecoin issuers, setting the benchmark at 1% of the total value of their stablecoins in circulation. This move positions the UK's regulatory approach as less stringent than the European Union's Markets in Crypto Assets (MiCA) regulation, which stipulates a 2% requirement. The FCA stated that this adjustment aims to create a more proportionate prudential framework for larger issuers while maintaining the overall robustness of the regime. In parallel, the FCA is working to simplify the operational framework for crypto exchanges, requiring them to allocate 40% of their trading capital to cover potential losses and apply a similar percentage to collateral value in lending or trading activities. These regulatory shifts follow the Bank of England's decision to abandon its earlier proposal to cap individual stablecoin holdings at £20,000.