STABLECOIN REGULATION: US V EUROPE
United States • Fragmented oversight: Multiple agencies regulate stablecoins, including the SEC, OCC, and Federal Reserve. • Bank-like treatment: Issuers may need to hold large reserves and meet strict liquidity requirements. • Securities classification: Some stablecoins are considered securities, adding compliance burdens. • State v Federal rules: Some issuers operate under state laws, while larger ones face federal oversight. • Legislation in progress: Bills like the Genius Act and Waters Bill aim to create a clearer framework. Europe • Unified framework: MiCA (Markets in Crypto-Assets) regulation provides a single EU-wide approach. • Single license: Issuers can operate across all EU member states without separate approvals. • Consumer protection: Issuers must hold sufficient reserves to ensure stability and transparency. • Strict AML rules: Anti-money laundering regulations require robust transaction monitoring. • Lower compliance costs: A centralised system reduces regulatory expenses compared to the US.
Claire Barratt
where best to locate and, by extension, who we can serve from that location.” Barratt explains that BCB is very keen to build a Middle Eastern hub but initial conversations will be anchored to understanding the legal requirements and speaking to clients, prospects and partners in the region. “We are starting this process now. There is definitely an opportunity as the Middle East can be challenging for payments and accessing local payment rails. But also, it is worth remembering that Singapore is also a target jurisdiction for us.” As BCB looks to grow its international reputation as a regulatory-first digital assets organisation, it is holding multiple meetings with regulators in the months ahead. The Middle East and Asia are two major regions where it is looking to expand its footprint. The group’s investors are also hugely supportive of this strategy, Barratt explains. “We want to build out in the Middle East first and then Asia after that. We are spinning up an expansion team so we want to replicate our success and that is all part of our fund aising efforts. “The commercial team is talking to clients to better understand their challenges and their pain points. We are keen to support our Middle East client base and expand our footprint. “We also want to know what opportunities could be opened up for existing clients by expanding our regulatory footprint there.” ◆
STABLECOIN REGULATION: THE UK
The UK government recently published draft regulations to bring crypto assets, including stablecoins, under a formal regulatory framework. The new rules, introduced under the Financial Services and Markets Act, seek to enhance investor confidence, and position the UK as a global digital assets hub. One of the key aspects of the draft legislation is the regulation of fiat-backed stablecoins. While stablecoins will not be included under the existing payment services regulation due to concerns about disproportionate regulatory burdens, their issuance and custody will be regulated under a tailored framework by the Financial Conduct Authority (FCA). It means stablecoins can still be used for payments in the UK, but they will remain unregulated for payment services for the time being, although plans are rumoured to be afoot to change this. As it stands, the FCA has outlined a phased approach to crypto regulation, with consultations planned throughout 2025 and final regulations expected in 2026. The UK government has clarified that crypto asset staking services will not be classified as collective investment schemes, reducing regulatory burdens for staking providers. The UK says it is working closely with the United States to align regulatory approaches, aiming to foster responsible innovation while ensuring consumer protection. The government has emphasised that these regulations are designed to curb scams, enhance transparency, and create a safer environment for digital asset transactions. Overall, the UK’s approach to stablecoin regulation reflects a balance between fostering innovation and ensuring financial stability. By introducing clear regulatory guidelines, the government hopes to attract crypto firms while safeguarding investors and consumers.
We are starting this process now. There is definitely an opportunity as the Middle East can be challenging for payments and accessing local payment rails. But also, it is worth remembering that Singapore is also a target jurisdiction for us. Claire Barratt
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