US and UK Progress Talks on Stablecoins After GENIUS Act
Financial regulators from both the US and the UK are accelerating discussions on stablecoins, tokenization, and the governance of digital assets with the implementation of the GENIUS Act underway in Washington.
Summary
- The 13th UK-US regulatory meeting took place in London on July 8.
- US officials provided updates to their UK partners regarding the implementation of the GENIUS Act and the overall structure of the crypto market.
- Both nations support one-to-one backing of stablecoins and advocate for improved regulatory alignment internationally.
- The Bank of England has revised its proposed holding limits, introducing a £40 billion issuance cap.
US and UK Regulators Collaborate on Stablecoin Policy
High-level representatives from HM Treasury and the US Treasury gathered in London for the 13th iteration of the UK-US Financial Regulatory Working Group, according to a joint statement released 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 discussions on July 8 prominently featured digital finance, with US officials briefing their UK counterparts on the implementation of the GENIUS Act for establishing a federal framework concerning payment stablecoins, alongside efforts to define the broader digital asset market framework within the US.
Additioally, topics such as tokenization, payment modernization, and the G20 Cross-border Payments Roadmap were addressed. UK representatives also updated attendees on the nation’s Wholesale Financial Markets Digital Strategy and the appointment of Christopher Woolard as the champion for Wholesale Digital Markets.
While the meeting did not result in new regulations or binding agreements, both sides reiterated their commitment to the “responsible use and growth of digital assets,” placing emphasis on consumer protection and financial stability, as per the working group’s official statement.
GENIUS Act Intensifies Pressure on UK Stablecoin Regulations
This conversation comes as the US shifts from legislative measures concerning stablecoins to implementation, creating a clearer operational pathway for issuers and financial institutions under 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 stablecoins classified as systemic.
Coordination is crucial for US stablecoin issuers aiming to access UK payment and capital markets. Differences in reserve requirements, custody policies, and insolvency protections may necessitate distinct regulatory structures in each country.
The two governments recognized this risk in a separate statement issued on July 14 by the Transatlantic Taskforce for Markets of the Future, affirming their objective to encourage convergence where feasible without altering domestic regulatory processes in either nation.
“Stablecoins depicted as money should be fully backed,” both governments emphasized.
The joint statement on stablecoins advocated for at least a one-to-one backing with high-quality liquid assets, segregated reserves, and prompt redemption, proposing pathways for stablecoins issued in one jurisdiction to access the market of the other.
Bank of England Eases Previous Restrictions
In June, the central bank removed the proposed holding limits of £20,000 for individuals and £10 million for businesses, replacing them with a temporary £40 billion issuance cap per systemic stablecoin, thus allowing users to transact without specific limits.
Furthermore, the Bank has reduced the required reserves that systemic issuers must maintain in non-interest-bearing central bank deposits from 40% to 30%. The remaining 70% may be invested in short-term UK government debt within a steady-state framework.
These revisions align the UK more closely with the shared US-UK stance that reserve rules should safeguard holders while not obstructing stablecoin businesses from operating effectively. The Bank of England aims to finalize its systemic stablecoin code by late 2026.
Future Directions for Transatlantic Stablecoins
The forthcoming phase will depend on how US authorities implement the GENIUS Act and whether both countries can convert their shared principles into formal market access agreements.
Key unresolved issues include the treatment of foreign-issued stablecoins, regulatory recognition between jurisdictions, reserve custody, and protocols for managing cross-border issuer insolvencies.
The Financial Regulatory Working Group plans to reconvene in early 2027. In the interim, the outcomes from July create a policy framework rather than a cohesive transatlantic regime, leaving issuers subject to distinct regulations in both the US and UK.
