The U.S. and U.K. have reaffirmed their commitment to reducing regulatory friction for digital assets and the modernization of capital markets.
In a joint statement issued on the 14th of July, the two governments shared a 10-point view on stablecoins and tokenized assets, with innovation as the anchor pillar.
The UK and United States affirm that stablecoins are an important vehicle for innovation in digital money. The UK and United States intend to enable the use of stablecoins in cross-border finance.
Some of the issues addressed include reserves, liquidity, and prudential requirements for stablecoin issuers to operate across the two markets.
In particular, the countries pledged to avoid ‘imposing burdensome’ reserve requirements for stablecoins.
Neither government intends to impose burdensome reserve requirements that are disproportionate to risk and that create unwarranted barriers to entry.
The above stance is noteworthy given the recent U.K. softer stance on stablecoin reserves. Initially, it pushed for a strict plan where only 60% of reserves would earn interest, while 40% would be non-yielding at the central bank. The industry pushed against this and called it anti-competitive.
In response, the Bank of England softened the proposal, allowing up to 70% in yield-bearing bonds and reducing cash requirements to 30%. This somewhat mirrored the U.S. GENIUS Act framework, which mandates reserves to be backed by highly liquid assets like U.S. Treasury bonds.
Additionally, it scrapped its caps on individual stablecoin holdings to match the U.S. open market. Still, the two countries have divergences on some aspects of crypto regulation.
The U.S.’s CLARITY Act stalls as the U.K. eyes clear rules by 2027
First, the U.K. will defer capital gains tax for crypto lending to avoid burden and double taxation. The rules will be live in 2027, alongside its broader crypto regulatory framework covering stablecoins, exchanges, staking, and market abuse, among others.
However, a similar U.S. crypto market structure bill, the CLARITY Act, has stalled and risks being deferred to the 2030s. With ethics provisions becoming a sticky issue, odds of CLARITY Act passage dropped to a record yearly low of 32% before briefly hitting 38%.
The bill has now become a political issue with increasing anti-tech rhetoric between Republicans and Democrats, according to Miles Jennings, legal chief at a16z VC firm.
The U.S. and the U.K. are pushing for a frictionless stablecoin and tokenization framework. But the U.S. risks falling behind amid uncertainty around the CLARITY Act.
Final Summary
- The U.S. and U.K. vowed to reduce friction for stablecoin usage as part of driving innovation in capital markets.
- But the U.S. could fall behind as CLARITY Act passage expectations have fallen to record lows.
