UK regulators plot crypto's future as Tether tests U.S. compliance waters

The United Kingdom is advancing its regulatory framework for cryptoassets, with a specific focus on stablecoins, as part of a broader effort to create a structured financial services environment. In November 2024, the government confirmed its intent to proceed with the proposed regulatory regime for cryptoassets, including the introduction of regulated activities such as stablecoin issuance and cryptoasset trading exchanges. This follows the initial publication of detailed proposals by HM Treasury in October 2023. Draft statutory provisions, along with an explanatory policy note, have been published for public review until May 2025. The regime is expected to include market abuse and admissions and disclosures frameworks, which will be addressed in future statutory instruments. These developments reflect the UK’s commitment to fostering innovation in digital assets while ensuring consumer protection and financial stability.

The Financial Conduct Authority (FCA) and the Bank of England have also published proposals for regulating stablecoins. The FCA's Discussion Paper focuses on the regulation of stablecoin issuance and holding, emphasizing the need for robust rules to protect consumers and prevent money laundering. The Bank of England's proposals address the regulation of payment systems using stablecoins at a systemic scale, ensuring these systems do not pose risks to financial stability. The proposals aim to support the safe innovation of stablecoins for retail payments, making them faster and cheaper while maintaining consumer confidence in digital money. The FCA and Bank of England have invited public and industry feedback by February 2024.

Tether, the largest stablecoin issuer, has announced the launch of USA₮, a U.S.-regulated, dollar-backed stablecoin designed to operate under the GENIUS Act, a landmark U.S. federal law governing stablecoin issuance. USA₮ will be issued by Anchorage Digital, the first federally regulated crypto bank, ensuring compliance with U.S. regulatory standards. The stablecoin is backed by transparent reserves, with Cantor Fitzgerald serving as the designated custodian and primary dealer. This development represents a strategic shift for Tether, which has faced regulatory scrutiny for its offshore operations. USA₮ is not legal tender and lacks backing or insurance from U.S. government agencies, but it aims to provide businesses and institutions with a reliable digital alternative to traditional cash and payment systems. Bo Hines, a former Executive Director of the White House Crypto Council, has been appointed as the CEO of Tether USA₮, bringing a wealth of expertise in legal and regulatory matters to the initiative.

Bitcoin has experienced significant price volatility in 2025, driven by a combination of macroeconomic factors, geopolitical developments, and regulatory changes. The cryptocurrency reached a record high of $124,171 in mid-July 2025, driven by institutional adoption, favorable regulatory news, and market speculation. Analysts have provided various price projections for the coming years, with some predicting Bitcoin could reach as high as $160,000 by the end of 2025 and potentially $1.5 million by 2030. These forecasts are based on factors such as the approval of Bitcoin ETFs, macroeconomic conditions, and institutional interest in the asset class. However, the market remains subject to high volatility, with potential corrections and regulatory uncertainties posing risks to sustained price appreciation.

The U.S. Federal Reserve's potential rate cuts in September 2025 are also expected to influence Bitcoin's price movement. Historical data from previous rate cuts shows a mixed response in Bitcoin's price, with gains and losses observed depending on the economic context. For example, a 25-basis-point cut in March 2020 led to a 37.5% decline in Bitcoin's price, while a 50-basis-point cut in September 2024 resulted in an 8.6% increase. The market currently expects a 25-basis-point cut with an 87% probability, which could lead to a short-term price increase of 3-5% if realized. The outcome of the Fed's decision will be closely watched by traders, particularly in September, which historically has shown a tendency for Bitcoin to deliver negative returns despite bullish market conditions.

The evolving regulatory landscape in the UK and the U.S., along with Bitcoin's performance and the launch of USA₮, highlight the increasing integration of stablecoins and cryptocurrencies into the global financial system. While these developments present opportunities for innovation and financial inclusion, they also underscore the need for robust regulatory frameworks to manage risks and ensure market integrity. The future trajectory of Bitcoin and stablecoins will depend on how effectively these frameworks are implemented and how the market responds to macroeconomic and geopolitical developments.