The UK's Financial Conduct Authority plans to reduce capital requirements for stablecoin issuers to 1% of their total stablecoin value in circulation, a move that undercuts the European Union's MiCA regulation. The FCA aims to simplify crypto exchange frameworks and prudential requirements.
The UK's decision to lower stablecoin capital requirements could attract crypto businesses seeking a less burdensome regulatory environment compared to the EU, potentially shaping the global landscape for stablecoin issuance and adoption.
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.