UK Crypto Regulation in 2026: What New FCA and Bank of England Rules Mean for Circle and Tether

Core Insights - The U.K. is set to implement new regulations for stablecoins in 2026, marking the first time these digital assets will be regulated under U.K. law [1][6] - The regulatory framework will consist of a proposed regime by the Bank of England for systemic stablecoins and new legislation categorizing crypto services as regulated financial activities [1] Regulatory Framework - The new regulations are not expected to significantly impact the use of stablecoins for crypto trading and decentralized finance [2] - An amendment to the Financial Services and Markets Act (FSMA) raises the regulatory standards for exchanges, particularly concerning the listing of low-quality tokens, but does not impose specific listing rules [2] Impact on Issuers - Large centralized stablecoins like USDT and USDC are expected to remain prevalent due to their popularity and stability [3] - Issuers aiming to integrate stablecoins into the traditional financial sector in the U.K. will need to enhance their compliance measures [3][4] Adoption and Compliance - The FSMA amendment differentiates between activities conducted within and outside the U.K., allowing Tether to issue USDT to British firms through offshore entities, but requiring registration with the Financial Conduct Authority for domestic operations [4] - The Bank of England's proposed regime is designed for future large-scale adoption of stablecoin payments, anticipating a GBP-denominated stablecoin of systemic importance [5][7] Future Outlook for Circle and Tether - The stablecoin market's growth has been driven by crypto and DeFi, but issuers are increasingly focusing on mainstream payment use cases for future adoption [8]