US, UK deepen stablecoin talks after GENIUS Act
US and UK regulators are stepping up coordination on stablecoins, tokenization and wider digital asset oversight, as Washington moves from passing the GENIUS Act to actually putting it into practice and London continues to reshape its own crypto and payments rulebook.
Senior officials from HM Treasury and the US Treasury convened in London for the 13th meeting of the UK‑US Financial Regulatory Working Group, according to a joint statement dated August 4. The session brought together a who’s who of transatlantic financial authorities: the Bank of England, the UK’s Financial Conduct Authority (FCA), and from the US side the Federal Reserve, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).
Digital finance dominated the July 8 agenda. US representatives briefed their UK counterparts on how the GENIUS Act is being rolled out. The law creates a federal framework for payment stablecoins and is intended to end years of ambiguity around which agencies oversee different aspects of the market. Officials also outlined broader work to define the overall regulatory architecture for digital assets in the United States, including how different tokens, intermediaries and platforms will fit within existing securities, commodities and banking rules.
Beyond stablecoins, the two sides exchanged views on tokenization of traditional financial assets, the modernization of payment systems, and global initiatives such as the G20 Cross‑border Payments Roadmap. UK delegates presented progress on the country’s Wholesale Financial Markets Digital Strategy and highlighted the appointment of Christopher Woolard as Wholesale Digital Markets Champion, a role designed to ensure that digital reforms translate into practical changes in market structure.
The meeting did not culminate in new binding rules or formal treaties. Instead, both governments used the opportunity to reaffirm a shared commitment: enabling “responsible use and growth of digital assets” while maintaining strong consumer protection, market integrity and financial stability. In other words, policymakers are trying to walk a narrow line-encouraging innovation in payments and capital markets without inviting a repeat of past crypto excesses or jeopardizing the banking system.
The timing is significant. In the US, the stablecoin debate has shifted from “should there be federal legislation?” to “how will that legislation work in practice?” As agencies translate the GENIUS Act into supervisory guidance, licensing requirements and examination procedures, stablecoin issuers and financial institutions finally gain a clearer path to operate at national scale under uniform federal rules instead of a patchwork of state regimes.
The UK, by contrast, is still in the process of completing its own regulatory framework. Under current proposals, the FCA will supervise issuance, custody and trading of qualifying fiat‑backed stablecoins in the UK market. For stablecoins judged to be systemically important-those with the potential to threaten payment systems or broader financial stability-the Bank of England will share oversight responsibilities, applying standards similar to those used for systemic payment systems and critical financial market infrastructure.
This emerging split of responsibilities has practical implications for cross‑border business models. US stablecoin issuers wanting access to UK payment rails or capital markets may face duplicate requirements around reserves, custody, redemption policies and wind‑down planning. Without careful coordination, divergences in areas like reserve composition, segregation of client assets and insolvency protections could force companies to maintain separate legal and operational structures in each jurisdiction, raising costs and legal complexity.
Both governments tried to pre‑empt that fragmentation in a separate July 14 communication issued by the Transatlantic Taskforce for Markets of the Future. In that text, they emphasized a goal of regulatory convergence “where appropriate,” while stressing that neither side intends to outsource or dilute its domestic rule‑making process. The message: alignment is desirable, but sovereignty over financial regulation remains non‑negotiable.
A core principle emerged clearly: “Stablecoins held out as money should be fully backed.” The joint statement on stablecoins spelled out what that means in practice. Issuers should maintain at least one‑to‑one backing with high‑quality liquid assets, keep reserves segregated from their own corporate funds, and offer timely redemption at par. The authorities also signaled interest in developing mechanisms that would allow a stablecoin fully compliant in one jurisdiction to operate more seamlessly in the other, subject to agreed safeguards.
On the UK side, the Bank of England has already begun dialing back some of its earlier, more restrictive proposals after extensive consultation with industry stakeholders. Initially, the Bank floated strict per‑wallet holding limits of £20,000 for individuals and £10 million for businesses using systemic stablecoins. That approach was criticized as unworkable for institutional use and potentially damaging to adoption. In June, the central bank dropped those caps in favor of a temporary £40 billion issuance guardrail per systemic stablecoin, removing constraints at the user level while still curbing rapid, unchecked growth in the aggregate.
The Bank also modified its stance on reserve composition for systemic issuers. Early drafts required that 40% of reserves be held as non‑interest‑bearing deposits at the central bank, with the remainder in short‑term UK government securities. Following feedback that such a large non‑remunerated slice would undermine profitability and discourage entry, the Bank cut this share to 30%, allowing the other 70% to be held in short‑dated government debt under the steady‑state regime. That change aims to maintain safety and liquidity while allowing sustainable business models.
These shifts bring the UK closer to the joint US‑UK position that reserve frameworks must prioritize holder protection but cannot be so onerous that they render stablecoin issuance commercially impossible. The Bank of England intends to finalize its detailed rulebook for systemic stablecoins by the end of 2026, leaving a multi‑year period in which firms and investors will have to operate under transitional arrangements and evolving guidance.
The next stage of transatlantic policy development will largely depend on how US regulators implement the GENIUS Act in practice-especially around licensing categories, prudential standards and supervision of reserve assets-and whether both countries decide to codify their emerging principles into formal market‑access arrangements. That could include mutual recognition of certain regulatory outcomes or streamlined approval for foreign‑issued stablecoins that meet equivalent standards.
Yet several critical questions remain unresolved. Authorities have not fully clarified the treatment of foreign‑issued stablecoins that are widely used domestically but supervised abroad, nor how regulatory recognition between jurisdictions will work in cases of partial divergence. Reserve custody-who can hold reserve assets, under what conditions, and with what protections-also needs to be harmonized if cross‑border circulation is to scale safely. Equally important are protocols for dealing with the failure of a cross‑border issuer so that redemptions and wind‑downs can be carried out in an orderly way across multiple legal systems.
The UK‑US Financial Regulatory Working Group is scheduled to meet again in early 2027. Until then, the recommendations and principles set out in July serve more as a directional signal than as a finished regulatory architecture. For now, stablecoin issuers, payment firms and institutional investors must navigate parallel US and UK regimes, adapting their structures to comply separately with each rulebook while regulators gradually test and refine their approaches.
Beyond the official communiqués, the deepening dialogue reflects a broader strategic concern: neither Washington nor London wants to see global payment standards shaped entirely by private actors or by jurisdictions with looser oversight. Stablecoins touch on monetary sovereignty, sanctions enforcement, anti‑money‑laundering controls and the competitiveness of domestic financial centers. Coordinated rule‑making is therefore as much about preserving influence over the future of money as it is about investor protection.
For financial institutions, the trajectory is becoming clearer. Banks and payment providers exploring tokenized deposits or stablecoin‑based settlement can expect a world where properly backed, well‑regulated stablecoins are allowed to plug into mainstream payment and trading infrastructure, while algorithmic or loosely collateralized designs face much tougher barriers. Firms operating on both sides of the Atlantic will increasingly structure their products so that reserve assets, governance and risk controls can satisfy both the GENIUS Act framework and the UK’s twin‑track oversight by the FCA and the Bank of England.
Issuers themselves are likely to respond by over‑collateralizing and simplifying their reserve portfolios. High‑quality liquid assets-such as short‑term government debt and central bank deposits-are emerging as the norm, with less room for riskier securities or complex rehypothecation strategies. Transparent, frequently audited reserves and legally robust segregation of client assets will be vital not just for compliance but also for earning the trust of large corporate and institutional users.
End‑users may not immediately notice the regulatory nuances, but the eventual outcome could reshape how money moves across borders. Fully compliant, interoperable stablecoins could reduce settlement times, lower remittance costs and streamline wholesale transactions, particularly when combined with tokenized securities and upgraded payment rails. At the same time, stricter rules on redemption, reporting and sanctions screening will likely limit the anonymity and free‑for‑all experimentation that characterized earlier phases of the crypto market.
Another area to watch is how these stablecoin frameworks interact with potential central bank digital currencies (CBDCs). Both the Bank of England and the Federal Reserve are investigating digital versions of their respective currencies, but neither has committed to full‑scale issuance. A robust, harmonized regime for privately issued stablecoins could either complement a future CBDC-by servicing niche use‑cases and cross‑border flows-or reduce the urgency for central banks to offer retail digital money at all.
For policymakers, the stakes go beyond the narrow category of stablecoins. The same supervisory tools and cross‑border coordination mechanisms developed today may later be applied to broader tokenization efforts, including digital bonds, tokenized funds and programmable money for automated trade and supply‑chain finance. The GENIUS Act and the UK’s Wholesale Financial Markets Digital Strategy are early pieces of a much larger puzzle: how to adapt decades‑old financial frameworks to an increasingly software‑driven, globally interconnected market infrastructure.
In the interim, market participants should treat the current period as a window for strategic preparation. Firms considering stablecoin issuance or integration into their payment and trading systems will need to model different regulatory scenarios, build flexible compliance architectures, and design legal structures capable of withstanding both US and UK scrutiny. Those that move early-aligning with the emerging principles on backing, transparency, governance and cross‑border cooperation-are likely to be best positioned once the transatlantic rules of the game finally solidify.