UK Loosens Stablecoin Rules, Tightens Noose on Crypto Lending
The UK government has introduced new regulations that will exempt certain stablecoin payments from crypto regulatory rules. The Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026, laid before Parliament on September 15, removes qualifying transfers from the rules for dealing as principal, dealing as agent, and arranging deals. This exemption applies to UK qualifying stablecoins issued through regulated article 9M activity by a firm holding the relevant permission.
However, not all stablecoin transactions are exempt. If the recipient has a right or obligation to return the stablecoin later, the transfer does not receive the basic exclusion, leaving ordinary lending or borrowing potentially regulated when the underlying activity tests are met. Swapping the stablecoin for another kind of qualifying cryptoasset, such as Bitcoin, also remains outside the payment carve-out.
The regulations also introduce a separate wholesale-style exception for some title-transfer collateral and repo arrangements involving qualifying stablecoins. This applies when the original holder is neither a consumer nor a person in a category specified by the Financial Conduct Authority.
Temporary UK qualifying stablecoin holding gets custody relief, with a new safeguarding provision excluding temporary holding of a UK qualifying stablecoin when that holding is connected with executing a payment. Longer-term custody, such as maintaining a customer wallet, receives no equivalent payment exception and can remain within the safeguarding activity.