The FCA's final stablecoin rules ban issuers from passing reserve income to holders. Reserve income goes to buffers and operations. HMRC will tax interest-like returns as savings income from 2027.
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The Financial Conduct Authority's final stablecoin policy, released 30 June 2026, prohibits qualifying fiat-referenced stablecoin issuers from passing interest or other income from the reserve pool to tokenholders. The ban covers both direct payments, such as monthly interest, and indirect structures, like loyalty multipliers that grow balances based on holding duration, or cashback programs funded by reserve earnings. The FCA said in its policy statement PS26/10 that the rule is designed to keep stablecoins in the payments lane, separate from deposit-taking and investment products, and to avoid run risks associated with rate-sensitive products.
Reserve income must instead support safety buffers, operations, and compliance. The FCA's policy materials set a reserve calibration: up to 70% in short-term UK government debt, with the remainder in unremunerated central bank deposits. The blended yield is not available for distribution. The final package also included prudential requirements: a permanent minimum own funds of £350,000, a reduced K-SII calibration at 1%, and a temporary per-coin issuance guardrail at £40 billion under the Bank of England's oversight.
On the tax side, HM Revenue & Customs published a policy paper on 13 July 2026 stating that interest-like returns on eligible stablecoins will be treated as savings income. For individuals and trustees, the change takes effect 6 April 2027; for companies, 1 April 2027. HMRC estimated roughly 1.2 million individuals could be affected. The tax treatment applies to returns from platforms or protocols, not from the issuer. The combination means that any yield earned on stablecoins outside the issuer layer will be subject to savings income tax from the 2027 date.
For issuers, the rules require careful documentation of all user incentives to ensure they are not funded from reserve income. The FCA's indirect payment prohibition catches any structure that routes reserve earnings to holders. The global norm for major fiat-backed stablecoins like USDC and USDT is to retain treasury income at the issuer level. The UK rule codifies that model for coins operating in the UK payments perimeter, with additional guardrails and prudential floors.
HMRC's paper also flagged that the stablecoin's eligibility for the tax treatment depends on meeting certain criteria. Issuers and users should seek independent tax advice.
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