UK issuer warns FCA stablecoin capital risk

TLDR

UK stablecoin issuer Agant is warning that the FCAs new capital rule could make sterling stablecoins less stable rather than safer.

1. Agant criticizes a 1 percent own funds capital charge tied to the total stablecoins in circulation, arguing it does not match the actual risk profile of issuers.
2. The firm says this rule could force issuers to halt new minting at equity limits, creating supply squeezes or depegs that undermine the very financial stability the FCA wants.
3. Applications for the new UK regime open in late 2026, so issuers and users should watch whether the FCA revises the capital model as broader UK, EU and US stablecoin frameworks converge.

Deep Dive

1. How The FCA Capital Rule Works

According to Agants chief legal officer, the FCAs finalized crypto rulebook includes an issuance linked own funds requirement called K-SII, set at 1 percent of the total sterling stablecoins in circulation for an issuer, adapted from banking and investment firm rules. Agants analysis argues this bank style charge is misapplied, because stablecoin reserves are already held in segregated trusts and backed one to one, so equity capital does not directly cover customer asset risk.

The framework mirrors EU MiCAs approach, which uses a 2 percent capital rate; the FCA cut its proposal from 2 percent to 1 percent after industry pushback, so a 1 billion dollar equivalent stablecoin now requires 10 million dollars in additional capital, not 20 million. The capital rule sits alongside broader UK authorization of exchanges, wallets, custodians and qualifying stablecoin issuers.

2. Why Issuers See New Risks

Agant warns that tying capital strictly to issuance volume can create instability if demand grows faster than an issuers equity base. Once the issuer approaches its capital ceiling, it would have to stop issuing new tokens until it raises more capital, potentially creating a supply squeeze that drives the secondary market price above the peg or triggers volatility that pushes it below.

The critique is that this structure makes the risk parameter demand driven, not balance sheet driven, and could generate instability precisely when stablecoins are most widely used. That might also leave UK sterling stablecoins at a competitive disadvantage versus jurisdictions that focus more on reserve quality and governance than on issuance linked equity.

3. Timelines And Policy Direction

The FCAs new rulebook moves UK crypto firms from a light registration regime to full authorization, with applications opening on 30 September 2026 and the framework taking effect on 25 October 2027 for covered activities, including stablecoin issuance. Agants warning is therefore arriving before implementation, at a point when supervisory guidance and potentially calibration could still evolve.

In parallel, the Bank of England is finalizing requirements for systemic stablecoins, including issuance guardrails and reserve composition, while UK and US regulators are working on coordinated standards that emphasize one to one high quality liquid asset backing and timely redemption. How the FCA reconciles its capital model with these broader stability goals will shape the UKs attractiveness for payment stablecoin issuers.

Conclusion

The headline reflects a real tension in UK policy between treating large stablecoin issuers more like banks and avoiding rules that destabilize pegs when demand grows. For crypto users and fintechs, the key is whether UK regulators refine this capital approach before the 2027 start date, so that sterling stablecoins remain both tightly supervised and operationally resilient in high demand scenarios.