US and UK Intensify Talks on Stablecoins in Wake of the GENIUS Act
Financial regulators from both the US and UK are deepening their discussions on 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 updates to their UK counterparts regarding the implementation of the GENIUS Act and the overall structure of the crypto market.
- Both governments support one-to-one backing of stablecoins and improved regulatory alignment across borders.
- The Bank of England has revised its proposed holding limits, introducing a £40 billion issuance cap.
US and UK Regulators Discuss Stablecoin Policy
High-level officials from HM Treasury and the US Treasury gathered in London for the 13th session of the UK-US Financial Regulatory Working Group, as indicated in a joint announcement released on August 4.
Participants included representatives 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 meeting prominently addressed digital finance, with US officials briefing their UK counterparts on the GENIUS Act’s implementation, which establishes a federal framework for payment stablecoins and ongoing efforts to define the broader digital asset market structure in the US.
Additionally, discussions covered topics such as tokenization, payment modernization, and the G20 Cross-border Payments Roadmap. UK representatives also shared developments pertaining to the nation’s Wholesale Financial Markets Digital Strategy and the appointment of Christopher Woolard as the lead for Wholesale Digital Markets.
Although the meeting didn’t result in new regulations or binding agreements, both sides reaffirmed their dedication to the “responsible use and growth of digital assets,” highlighting consumer protection and financial stability, as stated in the official working group release.
GENIUS Act Increases Pressure on UK Stablecoin Regulations
This dialogue unfolds as the US shifts from legislation on stablecoins to practical implementation, paving a clearer way for issuers and financial institutions to work under federal guidelines.
In contrast, the UK is still in the process of 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 that are deemed systemic.
Coordination is essential for US stablecoin issuers aiming to access UK payment and capital markets. Differences in reserve requirements, custody rules, and insolvency protections may necessitate varying structures in both countries.
The two governments recognized this risk in a separate statement from the Transatlantic Taskforce for Markets of the Future on July 14, affirming their intent to facilitate convergence where appropriate without compromising each nation’s domestic regulatory framework.
“Stablecoins positioned as money should be fully backed,” both governments declared.
The joint statement on stablecoins called for at least one-to-one backing with high-quality liquid assets, segregated reserves, and immediate redemption, while also suggesting pathways for stablecoins issued in one jurisdiction to enter the market of the other.
Bank of England Eases Previous Restrictions
In June, the central bank eliminated 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, allowing users to conduct transactions without specific limits.
Furthermore, the Bank reduced the required proportion 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 steady-state framework.
These changes align the UK more closely with the shared US-UK perspective that reserve rules should protect holders without imposing barriers that prevent stablecoin businesses 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 convert their shared principles into formal market-access arrangements.
Key unresolved issues include the treatment of foreign-issued stablecoins, regulatory recognition across jurisdictions, reserve custody, and protocols for addressing cross-border issuer insolvencies.
The Financial Regulatory Working Group plans to reconvene in early 2027. In the interim, the outcomes from July provide a policy framework rather than a unified transatlantic regime, obligating issuers to comply with distinct US and UK regulations.