The UK just made it significantly cheaper to run a stablecoin business on its soil. The Financial Conduct Authority published final policy statements on June 30 that cut the capital coefficient for Key Stablecoin Issuers (K-SIIs) from 2% to 1% of the value of stablecoins in circulation.

That is a direct halving of the capital buffer these firms need to hold, and it puts the UK’s requirements at exactly half of what the EU demands under its Markets in Crypto-Assets (MiCA) regulation.

What the FCA actually changed

The capital coefficient reduction is the headline number, but the FCA’s overhaul goes deeper than a single percentage point.

The regulator also removed redemption forecasting obligations for backing assets. In English: stablecoin issuers no longer need to predict and report how many tokens they expect customers to redeem at any given time.

Backing pools can now hold up to 5% in excess assets. Previously, keeping extra reserves above the 1:1 backing requirement created regulatory friction. Now issuers have room to maintain a small liquidity cushion without running afoul of the rules.

The framework still requires full 1:1 backing by high-quality liquid assets, along with statutory trust arrangements to protect customer funds.

Perhaps the most notable change that didn’t make the headline: the abandonment of individual holding limits. The Bank of England had previously floated a £20,000 cap on how much any single person could hold in regulated stablecoins. That proposal was reversed during 2025 consultations, meaning there’s no ceiling on how many stablecoins a UK resident can hold.

Authorization applications open on September 30, 2026, with the final rules taking effect on October 25, 2027.

The EU comparison, and why it matters

MiCA requires a 2% capital coefficient for stablecoin issuers. The UK now requires 1%. MiCA has its own set of redemption and reserve management rules. The UK just stripped several of those equivalents out.

These reforms have been in discussion since 2023, when the UK government first signaled its intention to create a bespoke regulatory framework for fiat-referenced stablecoins. Three years of consultations, industry feedback, and policy drafts have culminated in these final rules.

What this means for investors

The removal of holding limits is particularly relevant for institutional players. A £20,000 cap would have been a non-starter for any serious trading desk or treasury operation. Without that constraint, UK-regulated stablecoins become viable instruments for large-scale capital deployment, settlement, and hedging.

There’s a risk angle worth watching, though. Lower capital buffers mean issuers have less of a financial cushion if things go sideways. The 1:1 backing requirement and statutory trust protections provide a baseline of safety, but the margin for error is thinner at 1% than at 2%.