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FollowingBritish stablecoin issuers question FCA's new rules: Capital requirements may cause market instability
A British stablecoin issuer has raised objections to the UK's Financial Conduct Authority (FCA)'s latest crypto asset rulebook, warning that capital requirements linked to issuance could trigger financial fluctuations that regulators were trying to prevent.
Tom Rhodes, chief legal officer of Agant, wrote that the rule introduces a structural flaw in the overall widely accepted regulatory framework. Rhodes published an analysis on August 7, 2026, pointing out that although the regulatory system is generally considered mature and balanced, it has made a significant deviation from the traditional stablecoin business model.
Focus of controversy: Capital requirements
Rhodes 'focus is on the FCA's so-called "own capital" capital requirements, that is, capital requirements linked to issuance, set at 1% of the total amount of stablecoins in circulation, known as the K-SII requirement. Rhodes believes that the rule draws on prudent tools designed for banks and investment companies, but incorrectly applies it to stablecoin issuers whose reserve assets are already placed in segregated trusts, so the capital requirement does not correspond to actual risks.
Agant previously stated in written evidence submitted to the British Parliament that this requirement is meaningless and would increase financial stability risks because it is directly linked to market demand for stablecoins rather than to the issuer's actual risk profile. Rhodes warned that the practical consequences are obvious: An issuer close to the equity cap will have to suspend new issues while raising new capital. If the market grows strongly early, issuers may be forced to suspend issuance multiple times to raise capital, undermining the stability of stablecoins as supply cannot meet demand. This tight supply either pushes up secondary market prices above the anchor price, or encourages holders to sell, causing prices to fall below the anchor price.
Comparison of UK rules with other regions
The FCA is not the only one that implements such requirements: the EU's Crypto Asset Markets Regulation (MiCA) sets an equivalent capital requirement of 2% for European issuers, and the FCA reduced its original proposal from 2% to 1% after industry consultation. In practice, the revised ratio means that issuers issuing US$1 billion stablecoins would need to hold US$10 million in reserve capital instead of US$20 million. The FCA said the reduction from 2% to 1% was to make the framework more reasonable for large issuers.
The final rulebook includes exchanges, wallets, custodians, pledge services and eligible stablecoin issuers into the comprehensive authorized supervision system, replacing the previous model that was mainly based on anti-money laundering registration. Companies engaging in regulated crypto asset activities in the UK need to obtain FCA approval. Applications will be open on September 30, 2026. The regulatory system is expected to take effect on October 25, 2027.
The debate reflects a broader contradiction in the UK's stablecoin policy: how to build a credible, institutionally sound framework without accidentally constraining issuers that regulators had hoped to attract onshore.
