FCA Cuts Stablecoin Capital Buffer to 1%

The UK regulator is taking a lighter approach than MiCA, with updated requirements for crypto exchanges as well. The new rules are set to take effect in October 2027.

Key Takeaways

• The UK FCA is lowering the capital buffer for stablecoin issuers to 1% of tokens in circulation.
• That puts the regulator on a lighter path than the previously proposed 2% level, while also simplifying the rules for crypto exchanges.
• The FCA's updated crypto rules are set to take effect in October 2027, and the UK standard sits below the European MiCA requirement.

The UK Financial Conduct Authority (FCA) is cutting the capital buffer for stablecoin issuers to 1% of the value of tokens in circulation. That leaves the regulator with a lighter framework than the 2% level it had previously proposed, while the rules for crypto exchanges are also being pared back.

Lower Buffer for Issuers

The FCA said the lower requirement is meant to better match the size and structure of larger issuers without reducing the regime's overall resilience. It released the updated framework on Tuesday and said the new rules should be easier to apply in practice.

The change is notable because the UK's requirement now comes in below the 2% equivalent under the European MiCA rules. For stablecoins, that difference matters because issuers that operate across several jurisdictions often have to navigate different capital standards and supervisory approaches.

The softer stance also follows an earlier U-turn from the Bank of England, which dropped plans to cap individual stablecoin holdings at 20,000 pounds, or about $26,500 (€23,200). Taken together, those moves show the UK has quickly shifted toward a less restrictive approach to the sector.

Rules for Crypto Exchanges

The FCA is also looking to streamline the framework for crypto exchanges. Under the new rules, trading platforms would need to hold 40% of their trading capital against possible losses, and collateral used in lending or trading with other parties would face a 40% potential loss haircut.

According to the regulator, the aim is to simplify the core parts of the regime and make them easier to implement. That fits into a wider trend of major financial markets tightening and formalizing their oversight of crypto, with stablecoins remaining one of the main priorities. In practice, that also reflects the growing use of stablecoins in payments and settlement, including Circle and Nomura's partnership in Japan.

What This Means for Europe

For European crypto readers, the key comparison is MiCA. If the UK ends up with lighter rules than the European standard, that could shape how issuers structure their legal entities and operations. The FCA has also said the new crypto rules will take effect in October 2027, giving firms time to adjust their systems and processes.