The United Kingdom’s Financial Conduct Authority (FCA) reduced the proposed capital requirements for stablecoin issuers as it set out its formal guidance for cryptocurrency regulations.
The Financial Services Authority reduced the amount of financial backing that must be set aside to 1% of the total value of the stablecoins they issue. It was previously 2 per cent.
The change “makes the supervisory framework more proportionate for larger issuers, while maintaining the robustness of the overall regime,” the FCA said in a new framework document published on Tuesday.
The proposed requirement is lower than the 2% equivalent provision under the EU’s Markets in Crypto Assets (MiCA) regulation.
The FCA’s aim is to simplify key elements of the regime to make it more usable in practice, it said in a statement.
The move follows the Bank of England’s (BOE) reversal of its proposal to limit the value of stablecoins an individual can hold, abandoning plans to introduce a cap of 20,000 pounds ($26,500).
Major financial markets around the world have established formal regulatory regimes for monitoring cryptoassets in recent years, with stablecoins becoming one of the main areas of interest.
The FCA also aims to simplify the framework for crypto exchanges. Under the new rules, they must set aside 40% of their trading capital to cover potential losses and apply a potential loss of 40% of the value of their collateral when lending or trading with other parties.
