UK Stablecoin Rules: Can Issuers Pay Interest to Holders?

The UK has finally put shape around fiat-referenced stablecoins. After years of workshops, consultations, and a few false starts, the regulator answered the big question that kept coming up in boardrooms and Telegram chats: can issuers pay interest to holders?

Short answer: no. The Financial Conduct Authority’s final package makes that clear. The long answer is more nuanced, because the rule bites in specific ways, and other parts of the regime (and the tax office) still matter for anyone building products or parking cash in stablecoins.

Let’s unpack the ban, why it exists, where yields might still show up, and what changes on the tax side from 2027.

Point Details Issuer interest ban The FCA’s final rules keep a prohibition on passing interest or other income from backing assets to tokenholders, directly or indirectly (Financial Conduct Authority — PS26/10 (Policy Statement)). Backer portfolio design Policy materials reflect a calibration allowing up to 70% short-term UK government debt and the balance in unremunerated central bank deposits; issuers keep the yield for resilience (Skadden (client alert)). System guardrail A temporary per-coin issuance guardrail initially set at £40 billion appears in the policy framing, tied to Bank of England oversight (Skadden (client alert)). Issuer prudential floor Minimum own funds of £350,000 and K‑SII calibration reduced to 1% were set in the final package (Skadden (client alert)). Tax treatment HMRC says interest-like returns on eligible stablecoins will be taxed as savings income from April 2027 (6 April for individuals/trustees; 1 April for companies) and estimates ~1.2m individuals may be affected (HMRC / GOV.UK – Taxation of stablecoins).

… Continue reading the full article at the original source below.