What New FCA and Bank of England Rules Mean for Circle and Tether

Key Takeaways

• The U.K. is on course to finalize new regulations for stablecoins in 2026.

• New rules won’t affect access to USDT or USDC on crypto exchanges.

• However, they will affect Circle and Tether’s ability to expand more mainstream use cases in the country.

As the government and financial authorities advance new rules for the sector, in 2026, stablecoins are poised to fall under the umbrella of U.K. regulation for the first time.

But what implications does the expanding field of regulation have for issuers like Circle and Tether?

The U.K.’s emerging regulatory framework consists of two components: the Bank of England’s proposed regime for systemic stablecoins and new legislation establishing crypto services as regulated financial activities.

However, neither is expected to have a major impact on the use of stablecoins for crypto trading and decentralized finance.

An amendment to the 2000 Financial Services and Markets Act (FSMA) raises the regulatory bar for exchanges, making it risky to list low-quality tokens.

However, the legislation does not mandate specific listing rules. Ultimately, it will be up to platforms to determine the best way to protect users.

Given their popularity and track record of stability, the large, centralized stablecoins like USDT and USDC are unlikely to disappear.

The new statute wasn’t designed to outlaw crypto trading.

On the other hand, issuers that want to integrate stablecoins into the U.K.’s traditional financial sector will need to up their compliance game.

The FSMA amendment distinguished between activities that occur within or outside the U.K.

For instance, Tether will still be able to issue USDT to British firms through its offshore entities.

But if it wants to integrate GBP rails or manage reserve assets from within the U.K., it will need to register with the Financial Conduct Authority.

Similarly, the Bank of England’s proposed regime has little to say about the stablecoin market as it exists today.

Rather, it is a forward-looking framework designed with large-scale adoption of stablecoin payments in mind.

The central bank’s rules anticipate a currently hypothetical GBP-denominated stablecoin of systemic importance.

If, or when, a stablecoin that meets this threshold emerges, strict custody and reserve rules will take effect, requiring additional oversight for issuers.

While crypto and DeFi have fueled the stablecoin boom thus far, issuers are increasingly recognizing that more mainstream, payments-focused use cases will drive the next phase of adoption.

For Circle and Tether, the key question in a more tightly policed U.K. market is whether either issuer wants a regulated foothold inside the country’s payments and banking perimeter.

Circle already markets itself as compliance-forward and is registered with the FCA as an Electronic Money Institution.

This positions it well to pursue authorisation for stablecoin issuance if it wants deeper integration with GBP rails, regulated custody partners, and institutional payment flows.

Meanwhile, the most natural route for Tether would be to remain offshore.

But this approach will limit USDT to existing use cases or require intermediation by U.K.-regulated entities for payments integration.

Moreover, Tether’s existing model runs counter to the general direction of travel in the U.K., where tighter rules, clearer accountability, and reserve asset requirements are set to define future adoption.

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