Cross-Border Developments: A Comparison of UK and U.S. Regulatory Frameworks for Stablecoins

Key Takeaways:

Regulatory Structure:

1. The UK regulatory regime for stablecoins is centralized, with a single national regime integrating stablecoins into financial services law.
2. The US GENIUS Act (“GENIUS”)—the U.S. regime for stablecoins—creates a federal and state licensing regime for stablecoins issuers, involving participation by multiple states, federal banking regulators, and the U.S. Treasury.

Scope of Regulation:

1. The UK regime encompasses stablecoins within a broader digital asset perimeter governing issuers, custodians, lenders, and advisers amongst other regulated activities.
2. GENIUS focuses on payment stablecoins; market infrastructure (and the categorization of other digital assets) remains the subject of separate pending bills before the U.S. Congress.

Implementation Timelines:

1. UK legislation, requiring Financial Conduct Authority authorization before providing stablecoin-related services, is expected to come into force by the end of 2026.
2. GENIUS has been enacted, but it is not yet effective. A number of implementing rule proposals are expected in the near term, but final rules may be delayed beyond GENIUS’ July 2026 deadline. GENIUS will likely be effective by Q1 2027.

Cross-Border Impact:

1. Divergence in scope, licensing, and regulatory policy may hinder interoperability and create compliance friction for issuers and users across markets.
2. Any lack of “comparability” between aspects of GENIUS and the UK regime could impede the global adoption and cross-border use of stablecoins for business and retail payments.

Introduction

Stablecoins—digital tokens designed to maintain a stable value by being pegged to fiat currencies—have emerged as a critical bridge between traditional finance and the digital asset ecosystem. Both the United Kingdom and the United States are now advancing respective regulatory frameworks aimed at integrating stablecoins used in payments into their broader financial systems. While each regime aims to safeguard consumers, maintain market integrity, and foster responsible innovation, we outline below the different approaches taken by the two countries and the broader importance of “comparable” regimes.

Under GENIUS, foreign payment stablecoin issuers must, among other requirements: (i) be subject to regulation and supervision by a foreign payments stablecoin regulator that is comparable to the regulatory and supervisory regime under GENIUS; (ii) register with the Office of the Comptroller of the Currency; and (iii) hold reserves in the United States sufficient to meet the liquidity demands of U.S. customers. Divergence in regulation and supervision between U.S. and U.K. regulatory frameworks could make a “comparability” analysis challenging for the Stablecoin Certification Review Committee, who is tasked with the “comparability” determination. The criteria for comparability determinations are expected to be the subject of a future rulemaking proposal for public comment.

In the meantime, stablecoin issuers should monitor these developments as they may face duplicative or conflicting compliance obligations, especially regarding reserve composition, disclosure standards, and redemption rights. Businesses operating across both jurisdictions could encounter regulatory friction, discouraging global issuance and adoption.

Below we consider the current state of stablecoin regulation and what’s on the regulatory horizon, in both the UK and the United States. For ease of reference, please refer to the following chart, which summarizes some of the key differences noted in the discussion below.

UK vs. US Stablecoin Regulation

UK Regulation – Current State

The existing UK regime was implemented in response to AML concerns by way of the Money Laundering Regulations 2017.[1] These regulations cover a broad class of crypto-assets, with a crypto-asset itself being broadly defined as a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored, or traded electronically.

The regulator for this regime is the Financial Conduct Authority (“FCA”) who have issued guidance alongside the requirements of the Money Laundering Regulations. While the FCA has clarified that it will not regulate non-fungible tokens, the definition of crypto assets does not distinguish between stablecoins, tokenized deposits, or any other token.

Under the FCA regime, firms wishing to provide services of issuing, exchanging, or offering custody over crypto assets by way of business in the UK must first register with and obtain approval from the FCA. Firms, whether or not they are operating from a location inside or outside of the UK, wishing to promote crypto-asset services to prospective or existing UK customers may only do so if they have registered with the FCA under the Money Laundering Regulations. They first have their promotion approved by an FCA-authorized third-party firm, or they must qualify for one of the exemptions to the prohibition on financial promotions.

Under the principle of ‘same risk, same regulation,’ the existing regime does not include specific regulation for crypto assets for which the underlying asset involves an already regulated asset. For example, there is no specific regime for crypto assets representing debts or securities. The FCA has taken the approach that if the crypto asset represents an existing regulated asset, the existing regulation applies as an additional layer to the crypto regulation. Firms providing securities tokens must consider their obligation to be registered for crypto alongside their obligations under securities regulations such as the Markets in Financial Instruments Directive (“MiFID”) and Regulations.

UK Regulation – Future State

Efforts to develop the existing regime are led by the principal legislative drafting body, His Majesty’s Treasury, with input from the Prudential Regulation Authority (“PRA”) alongside the FCA. This “Crypto Taskforce” has issued several Consultation and Discussion Papers since 2020, outlining possible approaches to the regulation of stablecoins and other crypto assets. The FCA’s Crypto Roadmap indicates that legislation is expected to come into force in 2026. This timeline is subject, however, to parliamentary timelines for approving bills. We also expect there to be a period for implementation, during which firms will have time to work on compliance.

The proposed regime for stablecoins will come in the form of the Financial Services and Markets Act 2023, which creates a dedicated framework for crypto regulation by bringing various crypto‑related activities into scope of the financial services regulatory perimeter. The stablecoin regime will also be given effect through the introduction of specific crypto-relates activities within the Regulated Activities Order.[2]

In its Consultation Paper 14 of 2025 the FCA stated an intention that the issuance of stablecoin and safeguarding of the same will be introduced as a specified regulated activity. Firms engaged in issuing, safeguarding, redeeming, or maintaining the value of stablecoin will need to get FCA authorization (as opposed to the slightly less onerous money laundering registration under the existing regime) and:

• Maintain a reserve, or “back” qualifying stablecoins with secure, liquid assets in a statutory trust for qualifying stablecoin holders, with these backing assets held with a third-party custodian who is not in the issuers group;
• Offer to all holders rights of redemption of qualifying stablecoins in exchange for money, by the end of the next business day following receipt of a redemption request;
• Segregate client crypto assets from their own;
• Perform reconciliations each business day;
• Maintain accurate records; and
• Implement adequate controls and governance to protect clients’ crypto-assets holdings.

UK banks wishing to issue and use stablecoins in customer settlement accounts (as opposed to their own operational accounts) will need to obtain stablecoin permissions in addition to any regulatory permissions already held.

Just as it provides additional regulation to the FCA for systemic deposit takers, the PRA intends to bring an additional layer of regulation to firms who pose a more systemic risk to financial stability through the issue of stablecoin for systemic payments infrastructure. As it regulates deposit takers, the PRA will also be responsible for oversight of tokenized deposit takers.

In respect of systemic stablecoin issuers, the PRA has recently proposed the following regulatory measures:[3]

• Deposit takers may not offer e-money or stablecoin alongside their deposit products;
• If deposit takers wish to issue e-money or regulated stablecoin, then this should be done from a separate, non-deposit taking and insolvency remote entity, with distinct branding; and
• Deposit takers may only offer innovation in deposits in the form of tokenized deposits that must carry the same protections as traditional deposits (i.e., access to the Financial Services Compensation Scheme “FSCS”[4]).

In conclusion, the UK is making steps to implement a regime that will encourage and stabilize the stablecoin and tokenized deposits markets, and it has shown an intention to implement detailed and broad ranging measures within the next year or so, subject to parliamentary approvals.

U.S. Regulatory Updates

Following passage of GENIUS on July 18, 2025, the regulatory regime in the United States for payment stablecoins is now underway, with expected rulemaking proposals to follow for public comment.

The U.S. regulatory regime involves substantially more regulatory agencies as compared to the UK’s more streamlined regulatory framework under the FCA and the PRA. It involves regulation and supervision by the following entities:

• U.S. Department of the Treasury
• Under GENIUS, permitted payment stablecoin issuers are treated as “financial institutions” for purposes of the Bank Secrecy Act, and are subject to all federal laws applicable to a financial institution located in the United States relating to (i) economic sanctions; and (ii) prevention of money laundering, customer identification, and due diligence (collectively, “BSA/AML”).
• The Financial Crimes Enforcement Network (FinCEN) is required to issue regulations pertaining to BSA/AML obligations for stablecoin issuers, including standards for detecting illicit activity and transaction monitoring.
• Federal Banking Regulators (“FBAs”)
• The FBAs supervise and regulate stablecoin-related activities, including the issuance and redemption of stablecoins.
• The FBAs include the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”), and the National Credit Union Administration, which each separately regulate and supervise their constituents’ digital asset-related activities.
• State Banking Regulators (“SBAs”)
• The SBAs oversee the stablecoin-related activities of those who obtain licensing in their respective jurisdictions.
• The SBAs oversight can include application of state-level money transmission laws to digital asset custodians and trading platforms, as well as more comprehensive regulatory regimes for digital asset firms, including stablecoin issuers (e.g., New York state’s BitLicense framework, which is a dedicated licensing regime for digital asset firms operating in New York).

Although enactment of GENIUS marked an important bipartisan legislative achievement for the regulation and supervision of payment stablecoins, Congress has not yet passed legislation clarifying digital asset market infrastructure, including the potential roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission. Historically, this lack of regulatory clarity has stalled innovation or, in some cases, forced innovation offshore. There is renewed interest, however, following the White House’s Digital Assets President’s Working Group Report on Crypto and related Executive Orders, to prioritize legislative efforts in this area.

Under GENIUS, Congress established a comprehensive framework for licensing and oversight of certain stablecoin issuers. Firms engaged in issuing, redeeming, managing stablecoin reserves, or providing custody services for stablecoins are required to obtain a license at either the state or federal level.

Importantly, the licensing regime and related requirements under the GENIUS Act apply only to a specific subset of digital assets defined as “payment stablecoins”—that is, stablecoins used for payments where the issuer maintains a fixed monetary value and redeems tokens upon demand. The GENIUS Act does not extend to the issuance of other forms of digital currency, such as tokenized deposits or other types of non-payment stablecoins.

Entities licensed under the GENIUS Act must comply with a series of restrictions and operational obligations, many of which mirror comparable requirements in the UK. Key provisions include:

• Only allowing funds in the reserve account backing the stablecoin to be held in specific investments such as U.S. dollars maintained in demand deposit accounts and short-term U.S. Treasury bills, notes, or bonds (or equivalent instruments);
• Requiring that outstanding payment stablecoins be redeemed in a timely manner upon demand;
• Maintaining an identifiable reserve account on at least a 1:1 basis, with strict segregation requirements for those providing custodial services;
• Imposing attestation requirements, including for certain issuers the preparation of annual reports reviewed by an independent accounting firm; and
• Requiring issuers to be subject to capital, liquidity, and risk-management standards established by the relevant federal regulators.

The licensing opportunities available to stablecoin issuers under the GENIUS Act vary depending on the type of issuer and their expected volume of stablecoin issuance. Issuers may obtain a license through the OCC if they are a nonbank entity, an uninsured national bank, or a federal branch approved by the OCC. State licensing is also available, but only for non-bank entities with less than $10 billion in outstanding stablecoin issuance, and only where the state’s regulatory framework is deemed “substantially similar” to the GENIUS Act’s requirements.

A state-licensed issuer may operate both within its licensing state and in other states whose regulatory regimes are likewise determined to be substantially similar. However, obtaining a state license may present challenges, as it limits the volume of stablecoin issuance permitted and restricts the issuer’s operational scope to states whose laws meet the GENIUS Act’s substantially similar standard.

In conclusion, similar to the UK, the United States is taking steps to implement a regulatory framework that establishes a clear pathway for the nationwide issuance and distribution of stablecoins, where previously such activity was limited to a state-by-state regime. While the UK and United States have both taken meaningful steps toward a regulatory framework for stablecoins, there remains considerable work to do in both jurisdictions prior to the respective effective dates for these frameworks.

[1] Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

[2] The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

[3] See Proposed Regulatory Regime for Sterling-denominated Systemic Stablecoins, Bank of England, https://www.bankofengland.co.uk/paper/2025/cp/proposed-regulatory-regime-for-sterling-denominated-systemic-stablecoins (November 10, 2025).

[4] To qualify for FSCS, a customer’s claim cannot be a debt security, or an obligation on whose existence can only be proven by a financial instrument; principal must be repayable at par; and the holder and any beneficial owner of the deposit have been identified in accordance with money laundering regulations.