The UK’s Financial Conduct Authority (FCA) reduced proposed capital requirements for stablecoin issuers as it set out its formal guidance for cryptocurrency regulations.
The financial services regulator reduced the amount of financial support that must be reserved to 1% of the total value of the stablecoins they issue. Previously it was 2%.
The change “makes the prudential framework more proportionate for larger issuers, while maintaining the robustness of the overall regime,” the FCA said in a new framework document published on Tuesday.
The proposed requirement is lower than the equivalent stipulation of 2% under the European Union’s Cryptoasset Markets (MiCA) regulation.
The FCA’s aim is to simplify key elements of the regime to make it more workable in practice, it said in a statement.
The easing comes after the Bank of England (BOE) revoked its proposal to limit the value of stablecoins an individual can hold, abandoning plans to impose a limit of 20,000 pounds ($26,500).
Major financial markets around the world have been establishing formal regulatory regimes for the oversight of crypto assets in recent years, with stablecoins emerging as one of the most important areas of interest.
The FCA also aims to simplify the framework for crypto exchanges. Under the new rules, they will have to reserve 40% of their trading capital to cover potential losses and apply a 40% potential loss to the value of their collateral when lending or trading with other parties.
