UK regulators advance crypto framework as stablecoin rules ease

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UK advances crypto regulation

Highlights

The Financial Conduct Authority's finalized crypto rules introduce stricter capital requirements, admissions criteria, and conduct standards for UK crypto firms as of last month.
The Bank of England eased rules by scrapping plans for stablecoin holding limits and cutting the reserve requirement from 40% to 30% for issuers at the central bank.
Mandatory authorization under the new UK crypto regime takes effect in October 2027, with upcoming regulatory clarity needed on DeFi, operational resilience, and tax treatment.

Recent regulatory shifts for crypto firms

As reported by CoinDesk, the opinion article by Wirex CEO Chet Shah says recent action by UK regulators signals a more serious push to turn the country into a competitive crypto market. Shah points to the Financial Conduct Authority's finalized crypto rules last month, which set guidance on capital requirements, admissions, disclosures and broader conduct standards for firms.

He also highlights the Bank of England's decision to drop previously proposed limits on holdings of fiat-pegged stablecoins and to reduce the reserve requirement for issuers at the central bank from 40% to 30%. In his view, those changes offer the clearest indication yet that the UK wants to build a functioning crypto regime rather than continue with broad policy ambitions alone.

Shah says the industry has viewed the UK's earlier approach as overly restrictive, citing slow authorization processes, unclear operating rules and financial promotion requirements that were seen as difficult to apply in practice. He adds that some major financial institutions have also blocked or restricted customer transfers to crypto exchanges, creating another barrier for a sector that already includes FCA-regulated firms.

Competitiveness and policy continuity in focus

Shah compares the UK's progress with other markets where stablecoin adoption and regulation have moved faster. He cites Visa and Dune data showing the number of unique holders of non-dollar stablecoins grows 30-fold between January 2023 and February 2026, with much of that activity tied to payments, settlement and payroll rather than speculation.

He argues that the EU and the U.S. have already given firms more certainty through frameworks such as MiCA and the GENIUS Act, while the UK is still finalizing key parts of its digital asset regime. Areas still to be settled include DeFi guidance, operational resilience standards for firms using distributed ledger technology and tax treatment for digital assets.

The article says the industry is now working toward October 2027, when authorization under the new UK crypto regime becomes mandatory for firms operating in the country. Shah adds that policy continuity will be tested by the expected change in Labour leadership following Prime Minister Keir Starmer's resignation, and says the UK's crypto agenda will need to avoid becoming a political issue if it is to support long-term sector growth.

Our earlier report on Senate Democrats’ call for hearings into President Donald Trump’s crypto ties covered new financial disclosures showing the Trump family’s crypto ventures generated about $1.4 billion in income and raised questions about foreign and unidentified investors. We also highlighted lawmakers’ focus on World Liberty Financial and the role of unnamed “Third Parties,” citing concerns about potential conflicts of interest, national security risks, and the impact of regulatory rollbacks alongside pro-crypto policy efforts.

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