Crypto industry groups in the UK are calling for revisions to the Bank of England and Financial Conduct Authority's (FCA) proposed regulations on stablecoins. These proposals aim to regulate stablecoins pegged to fiat currencies or stable assets but have been met with criticism for potential inconsistencies and restrictions on stablecoin issuers' revenue models.

In November, the BoE and FCA outlined their regulatory approach, sparking a mixed reaction from the crypto community. While some aspects were welcomed, concerns were raised about the potential misalignment between the two regulators, especially regarding stablecoin issuers' ability to earn interest on reserve assets.

The FCA has proposed allowing stablecoin issuers to profit from the interest on reserve assets, whereas the BoE suggests systemic stablecoins should only back assets in central bank reserves, limiting issuers' revenue opportunities. Industry advocates argue this difference could hinder stablecoin issuers' growth and force them to alter their business models drastically.

Additionally, there are calls for greater flexibility in what assets can back stablecoins, with suggestions that the current proposals could stifle the potential for issuers to operate in the UK effectively. The debate extends to whether stablecoin providers should be included under the Financial Services Compensation Scheme, with opinions divided on the feasibility and fairness of such a measure.

The FCA is set to review the feedback on its consultation and will draft a rulebook for further consultation, as the UK seeks to balance innovation with regulatory oversight in the evolving stablecoin market.