Regulatory authorities in the US and UK have ramped up discussions regarding stablecoins, tokenization, and the governance of digital assets as the implementation of the GENIUS Act commences in Washington.
Summary
- The 13th UK-US regulatory meeting took place in London on July 8.
- US officials provided an update to their UK counterparts on the implementation of the GENIUS Act and the organization of the crypto market.
- Both administrations support one-to-one backing of stablecoins and enhanced regulatory alignment across borders.
- The Bank of England has revised its proposed holding limits, introducing a new £40 billion issuance cap.
US and UK Regulators Discuss Stablecoin Policy
High-level representatives from HM Treasury and the US Treasury gathered in London for the 13th session of the UK-US Financial Regulatory Working Group, as announced jointly on August 4.
Participants included officials from the Bank of England, Financial Conduct Authority, Federal Reserve, Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
The July 8 discussions prominently addressed digital finance, with US officials updating their UK colleagues on the implementation of the GENIUS Act, which establishes a federal framework for payment stablecoins, along with ongoing efforts to clarify the overall structure of the digital asset market in the US.
Additionally, topics such as tokenization, payment modernization, and the G20 Cross-border Payments Roadmap were discussed. UK representatives provided insights into the country’s Wholesale Financial Markets Digital Strategy, highlighting Christopher Woolard’s role as the champion for Wholesale Digital Markets.
Though the meeting did not result in new regulations or binding agreements, both parties underscored their dedication to the “responsible use and growth of digital assets,” focusing on consumer protection and financial stability, as detailed in the official statement from the working group.
GENIUS Act Puts Pressure on UK Stablecoin Regulations
This dialogue unfolds as the US shifts from legislative measures on stablecoins to practical implementation, clearing a pathway for issuers and financial institutions to adhere to federal guidelines.
In contrast, the UK is still finalizing its regulatory framework. The FCA is anticipated to oversee the issuance, custody, and trading of qualifying UK stablecoins, while the Bank of England will co-regulate those identified as systemic.
Coordination is essential for US stablecoin issuers seeking access to UK payment and capital markets. Variations in reserve requirements, custody regulations, and insolvency protections could necessitate different frameworks in both countries.
Both governments acknowledged this risk in a separate statement issued on July 14 by the Transatlantic Taskforce for Markets of the Future, affirming their goal of encouraging convergence when appropriate without modifying either country’s domestic regulatory processes.
“Stablecoins represented as money should have full backing,” both governments contended.
The joint statement on stablecoins called for at least one-to-one backing with high-quality liquid assets, reserving assets separately, and ensuring prompt redemption, while also suggesting pathways for stablecoins issued in one jurisdiction to access the other’s market.
Bank of England Eases Previous Restrictions
Following industry feedback, the Bank of England has already modified some of its stricter stablecoin proposals.
In June, the central bank withdrew the proposed holding limits of £20,000 for individuals and £10 million for businesses, instead instituting a temporary £40 billion issuance cap per systemic stablecoin, allowing users greater transaction flexibility.
Furthermore, the Bank decreased the percentage of reserves that systemic issuers must hold as non-interest-bearing central bank deposits from 40% to 30%. The remaining 70% may be invested in short-term UK government debt within a stable framework.
These changes align the UK’s position more closely with the shared US-UK perspective that reserve rules should protect holders without imposing barriers that obstruct stablecoin enterprises from operating effectively. The Bank of England aims to finalize its systemic stablecoin regulations by the end of 2026.
Future Directions for Transatlantic Stablecoins
The next phase will depend on how US authorities implement the GENIUS Act and whether both countries can translate their shared principles into formal market-access arrangements.
Key unresolved issues include the treatment of foreign-issued stablecoins, cross-jurisdictional regulatory recognition, reserve custody, and protocols for managing cross-border issuer insolvencies.
The Financial Regulatory Working Group aims to reconvene in early 2027. Meanwhile, the outcomes from July provide a policy framework rather than a cohesive transatlantic regime, leaving issuers subject to distinct US and UK regulations.
