UK Loophole Opens Up for Stablecoin Payments Amid Crypto Lending Crackdown
The UK government has introduced new regulations that open up a major loophole for stablecoin payments while clamping down on crypto lending. According to the draft instrument laid before Parliament, qualifying transfers of stablecoins could avoid dealer permissions.
This relief is narrower than a blanket exemption for sterling stablecoins and only applies to UK-issued coins through regulated article 9M activity by firms holding relevant permissions. Sending or exchanging a stablecoin for money or another qualified coin falls outside the dealer perimeter, but swapping it for another cryptoasset remains potentially regulated.
The draft also adds a separate wholesale-style exception for title-transfer collateral and repo arrangements involving qualifying stablecoins. Temporary UK qualifying stablecoin holding receives custody relief, excluding temporary holdings connected with executing payments from safeguarding activity.