UK Unveils Two-Tier Stablecoin Regulation Amid Global Trend

The UK has finalized its regulatory framework for stablecoins, following policy statements from the Bank of England and UK Financial Conduct Authority. The two-tier approach distinguishes between systemic and non-systemic stablecoins, with enhanced regulation for the former.

Issuers will need to establish a framework for securing and safeguarding backing assets, enabling timely redemption, and restricting remuneration. They must also demonstrate transparency through specific disclosure and a market abuse regime.

The UK's approach is part of a broader trend in regulating stablecoins globally. The EU's Markets in Crypto-Assets Regulation (MiCA) and the US's Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) have set similar standards, including requirements for backing assets, prudential requirements, redemption, safeguarding, and remuneration.

The UK's regime maintains the principle that stablecoins should be backed by a pool of assets on a one-for-one basis. Systemic stablecoins are subject to stricter requirements, with 70% of their backing asset pool consisting of short-term UK government debt securities, and the remaining 30% comprising unremunerated central bank deposits.