FCA cuts stablecoin capital buffers to 1%, below EU's 2% MiCA standard
In brief
- FCA lowered stablecoin issuer capital requirements from 2% to 1% of total value issued
- 1% requirement undercuts EU's 2% MiCA standard for stablecoins
- Bank of England abandoned plan to cap individual stablecoin holdings at £20,000
- Crypto exchanges must reserve 40% of trading capital for potential losses
Capital buffers cut below European standard
The FCA's proposed 1% capital requirement for stablecoin issuers is lower than the 2% equivalent stipulation under the European Union's Markets in Crypto Assets regulation. The move signals the UK regulator's intent to set a more permissive framework than its EU counterpart, at least on this dimension of stablecoin prudential rules.
The FCA justified the reduction as proportionate for larger issuers. "The change makes the prudential framework more proportionate for larger issuers while maintaining the robustness of the overall regime," the FCA said in a new framework document published Tuesday.
Bank of England's retreat on holdings caps
The Bank of England reversed its proposal to limit the value of stablecoins an individual can hold, abandoning plans to impose a £20,000 cap. That earlier proposal had drawn industry pushback as overly restrictive for retail users and institutional players alike.
The loosening reflects a broader shift toward a lighter-touch stance on stablecoin regulation. Rather than constrain demand-side holdings, the FCA is focusing on issuer solvency and exchange safeguards.
Exchange capital rules and simplification agenda
Under the new rules, crypto exchanges will need to set aside 40% of their trading capital to cover potential losses. This standard applies to platforms offering stablecoin and crypto trading services.
The FCA's aim is to simplify key elements of the regulatory regime to make it more workable in practice. The regulator has signaled that proportionality and practicality, rather than maximum stringency, will guide implementation of its crypto asset framework going forward.
