The UK’s Financial Conduct Authority (FCA) has reduced proposed capital requirements for stablecoin issuers as it sets out its formal guidance on regulating cryptocurrencies.
The financial services regulator has reduced the amount of financial support that must be set aside to 1% of the total value of stablecoins it issues. It was previously 2%.
This change “makes the prudential framework more proportionate for large 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 equivalent 2% stipulation under the European Union’s Markets in Crypto Assets (MiCA) Regulation.
The FCA’s aim is to simplify key elements of the scheme to make it more workable in practice, it said in a statement.
The easing follows the Bank of England (BOE) reversing its proposal to limit the value of stablecoins an individual can hold, abandoning plans to impose a cap of 20,000 pounds ($26,500).
In recent years, major financial markets around the world have established formal regulatory regimes for the oversight of crypto assets, with stablecoins becoming one of the most significant areas of focus.
The FCA also aims to simplify the framework for crypto exchanges. Under the new rules, they will have to set aside 40% of their trading capital to cover potential losses and apply a 40% potential loss to the value of their collateral when lending or trading with other parties.
