UK FCA Slashes Stablecoin Capital Reserves to 1%, Undercuts MiCA

The UK Financial Conduct Authority just cut stablecoin capital buffers to 1% of total circulation — half the 2% the EU requires under MiCA, and a deliberate bid to pull issuers to London. That 1% figure replaces the FCA's own earlier 2% proposal, making the regime "more proportionate for larger issuers" while claiming to keep the system robust.

Why 1% Beats 2% for Issuers and the Market

A 1% capital requirement means a stablecoin issuer with £10 billion in circulation only needs to hold £100 million in liquid backing, versus £200 million under MiCA. That frees up capital for operations or yield generation — a direct regulatory advantage for firms choosing London over Paris or Berlin. The FCA also dropped the previous tiered structure, simplifying compliance for all sizes.

The Bank of England made its own pivot: it abandoned the planned £20,000 ($26,500) cap on individual stablecoin holdings. That removes a ceiling that would have throttled institutional use cases like treasury management or cross-border settlement. Together, these moves tell a clear story: the UK wants to be the go-to jurisdiction for stablecoin issuance, not just a MiCA copycat.

Exchange Capital Rules Get a Cleanup

The FCA didn't stop at stablecoin issuers. Crypto exchanges now must set aside 40% of their trading capital to cover potential losses, with another 40% loss applied to collateral value when lending or trading with counterparties. That's a straightforward, single-number rule replacing what could have been a complex net-capital calculation. It forces exchanges to hold meaningful skin in the game without the Byzantine reporting that plagues traditional financial firms.

This regulatory lightweighting comes as the EU's MiCA deadline pushes firms to reassess their European hubs. The FCA's message is unambiguous: we can write rules that actually work for the industry. Whether that attracts the volume and tax revenue the Treasury hopes for depends on execution, but the direction is set. Stablecoin issuers now have a clear incentive to locate reserve management and compliance in the UK, not Brussels.

Source: UK to lower stablecoin capital buffers, undercutting EU's MiCA requirements
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