Britain wants to be the friendlier place to issue a stablecoin. Its regulators are finalizing a regime that sets a lower capital requirement for stablecoin issuers than the European Union demands — reportedly around 1% of the value of coins outstanding, versus the EU's 2%, CoinDesk reported. It's a deliberate, post-Brexit pitch: come build here.

First, the terms

A stablecoin is a crypto token designed to hold a steady value — usually pegged one-to-one to a currency like the dollar or pound — so it can be used for payments rather than speculation. To keep that peg credible, an issuer must hold backing assets (cash and safe bonds) so it can redeem every token at face value on demand. On top of that backing, regulators require a capital buffer — extra own funds to absorb losses and cushion against a sudden rush of redemptions (a "run"). The UK's reported 1% buffer is that cushion; a lighter buffer frees up capital for the issuer but leaves a thinner margin for error.

How the UK and EU differ

Both regimes insist on full backing of the coins. The difference is in the capital and the flexibility:

  • The EU's MiCA rules (now in full force) require issuers of these tokens to hold own funds of at least 2% of reserve assets, with strict, bank-style conditions on the biggest "systemic" coins.
  • The UK is going to roughly 1%, and — per the Bank of England's plans for the largest, payment-grade stablecoins — allowing reserves to be split between central-bank deposits and short-term government debt, giving issuers a bit more room to earn a return on their backing. UK authorization applications are slated to open later in 2026, with the regime phasing in over the following year.

The intent is plain: lighter, "proportionate" rules to attract issuers who might otherwise base themselves in the EU — or in the US, which passed its own GENIUS Act stablecoin law.

Regulatory competition — and its risk

This is the latest move in a global jostle over crypto rules that Boursel has tracked — from the EU's MiCA and the US GENIUS Act to lighter-touch regimes in Singapore and Hong Kong, and new oversight in places like Australia. Lighter capital rules are a competitive lever: they cut issuers' costs and can spur innovation.

But there's a tension. Thinner buffers mean less of a shock absorber if a stablecoin faces a wave of redemptions or its backing assets wobble — exactly the scenario regulators worry about, given the run risk that has felled stablecoins before. Critics warn that competing on leniency risks a "race to the bottom" in financial-stability standards; supporters counter that proportionate rules — full backing plus a sensible (if smaller) buffer — can protect holders without smothering a young industry.

Why it matters

For stablecoin issuers, the UK's stance is an invitation to set up shop in London, and a factor in the global contest to host the plumbing of digital money. For holders and users, it's the familiar trade-off at the heart of crypto regulation: a lighter rulebook that lowers costs and may broaden access, against a slightly thinner safety margin if things go wrong. And for the system, it's a reminder that as crypto gets folded into mainstream finance, jurisdictions won't just copy each other — they'll compete, and where they set the dials will shape who issues the world's stablecoins, and how safely. Boursel takes no view on any token; the signal is that Britain is betting a lighter touch will win it the business.