US and UK financial regulators are deepening coordination on stablecoin oversight following the US GENIUS Act. At a July 8 meeting in London, officials discussed one-to-one backing and cross-border access for stablecoins. The Bank of England has softened its rules, replacing holding limits with a £40B issuance cap and reducing central bank deposit requirements from 40% to 30%, as the UK aims to keep pace with US regulatory momentum.
US-UK Financial Regulatory Working Group
- ▪The 13th UK-US Financial Regulatory Working Group meeting was held in London on July 8
- ▪Attendees included officials from HM Treasury, US Treasury, Bank of England, FCA, Federal Reserve, SEC, CFTC, FDIC, and OCC
- ▪The July 8 meeting did not result in new regulations or binding agreements
GENIUS Act implementation
- ▪During the July 8 meeting, US officials updated UK regulators on the implementation of the GENIUS Act
- ▪The GENIUS Act establishes a federal framework for payment stablecoins in the United States
Stablecoin reserve requirements
- ▪A joint US-UK statement on July 14 called for stablecoins to be fully backed one-to-one with high-quality liquid assets
- ▪The Bank of England replaced proposed per-coin holding limits with a temporary £40 billion issuance cap for each systemic stablecoin
- ▪The remaining 70% of reserves for UK systemic stablecoins can be held in short-term UK government debt
- ▪The Bank of England also reduced the required share of reserves held as non-interest-bearing central bank deposits from 40% to 30%
- ▪The joint statement also called for segregated reserves and timely redemption for stablecoins
Cross-border payment modernization
- ▪Officials discussed payment modernization and the G20 Cross-border Payments Roadmap during the meeting
- ▪The Transatlantic Taskforce for Markets of the Future, a joint US-UK initiative, also published recommendations on July 14
- ▪The UK's Financial Conduct Authority (FCA) has identified cross-border payments as one of the clearest near-term use cases for stablecoins
Regulatory competitiveness dynamics
- ▪Some industry observers believe the UK is losing ground to the US on stablecoin regulation following the passage of the GENIUS Act
- ▪In the UK, the FCA will oversee most stablecoins, while the Bank of England will jointly regulate systemically important ones
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