FCA Finalizes Crypto Rulebook: Stablecoin Capital Ratio Reduced from 2% to 1%

The UK Financial Conduct Authority (FCA) has finalized its regulatory framework for crypto assets. The published rulebook includes a significant change in capital requirements for stablecoin issuers. The minimum capital ratio, previously set at 2%, has been reduced to 1% following feedback from industry representatives. The FCA stated that this revision aims to ensure proportionality in regulations and to foster innovation. The new rules also clarify transparency and custody standards for stablecoin reserve assets. The authority emphasized that this step contributes to the UK's goal of becoming a crypto asset hub. The rulebook also includes provisions for user protection in the event of stablecoin insolvency. Issuers are now required to hold reserve assets separately and conduct regular reporting. These regulations will take effect in early 2025. Industry experts say the reduction in the capital ratio will lower costs, especially for small and medium-sized stablecoin projects, and reduce barriers to market entry. However, some analysts warn that this change could increase systemic risks. This is not investment advice.