Global FX Settlement Regulatory Comparison: US, EU, UK, Singapore & International Standards
A comprehensive comparison of regulatory frameworks governing off-bank FX settlement and stablecoin payments across major jurisdictions including the United States (GENIUS Act), European Union (MiCA), United Kingdom, Singapore, and global standards from FSB and FATF.
TL;DR
- •Global regulatory frameworks converging around 100% reserve backing, redemption guarantees, and licensing requirements for stablecoin-based payment systems
- •US GENIUS Act creates two-tier licensing (banks vs non-banks), EU MiCA distinguishes e-money tokens from asset-referenced tokens, UK adopts multi-regulator systemic approach
- •All major jurisdictions require reserves in high-quality liquid assets, par redemption rights, and enhanced supervision for systemically important arrangements
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Global FX Settlement: Regulatory Landscape Comparison
The regulatory landscape for off-bank FX settlement and stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold-based payments is rapidly evolving across major financial jurisdictions. This comparative analysis examines how the United States, European Union, United Kingdom, Singapore, and international standard-setting bodies are approaching the regulation of these innovative payment systems.
| Jurisdiction | Regulatory Framework | Key Requirements | Licensing Approach | Capital & Reserve Requirements |
|---|---|---|---|---|
| United States | GENIUS Act Framework Focuses on payment stablecoin regulation with potential implications for FX settlement |
| Two-tier system: 1. Banks: Existing charter + Fed approval 2. Non-banks: New federal license from Fed Minimum $10B issuance for systemic designation |
|
| European Union | Markets in Crypto-Assets (MiCA) Regulation Comprehensive framework for crypto-assets including e-money tokens and asset-referenced tokens |
| Tiered approach: 1. E-Money Tokens: E-money institution or credit institution license 2. Asset-Referenced Tokens: Specific MiCA authorization “Significant” tokens subject to enhanced requirements |
|
| United Kingdom | Systemic Stablecoin Regime HM Treasury & Bank of England framework for systemic payment systems using stablecoins |
| Multi-regulator approach: 1. FCA: Conduct and prudential regulation 2. Bank of England: Systemic stability oversight 3. PSR: Payment systems regulation |
|
| Singapore | BLOOM Initiative & Payment Services Act Regulatory framework for digital payment token services and stablecoins |
| MAS licensing: 1. Standard Payment Institution License 2. Major Payment Institution License (for larger operations) Single-currency stablecoins receive favorable treatment |
|
| Global Standards | FSB & FATF Frameworks International standard-setting bodies for financial stability and AML/CFT |
| Principles-based approach: FSB and FATF provide guidance, not direct licensing Implementation through national regulators |
|
United States
Regulatory Framework
GENIUS Act Framework
Focuses on payment stablecoin regulation with potential implications for FX settlement
Key Requirements
- Payment stablecoin issuers must be insured depository institutions or approved nonbank issuers
- 100% reserve backing with high-quality liquid assets
- Monthly attestations and annual audits
- Redemption at par value within one business day
Licensing Approach
Two-tier system:
1. Banks: Existing charter + Fed approval
2. Non-banks: New federal license from Fed
Minimum $10B issuance for systemic designation
Capital & Reserve Requirements
- 100% reserve backing required
- Eligible assets: US dollars, Treasury securities, repurchase agreements, central bank reserves
- Segregated reserve accounts
- Subject to bankruptcy remoteness provisions
European Union
Regulatory Framework
Markets in Crypto-Assets (MiCA) Regulation
Comprehensive framework for crypto-assets including e-money tokens and asset-referenced tokens
Key Requirements
- Authorization required for issuers and service providers
- Detailed white paper requirements
- Reserve asset management and custody rules
- Consumer protection and transparency obligations
- Redemption rights at any time at par value
Licensing Approach
Tiered approach:
1. E-Money Tokens: E-money institution or credit institution license
2. Asset-Referenced Tokens: Specific MiCA authorization
“Significant” tokens subject to enhanced requirements
Capital & Reserve Requirements
- Own funds: €350,000 or 2% of average reserve assets
- Reserve assets: 1:1 backing with safeguarded assets
- Eligible reserve assets: deposits, high-quality liquid financial instruments
- Segregation and custody requirements
United Kingdom
Regulatory Framework
Systemic Stablecoin Regime
HM Treasury & Bank of England framework for systemic payment systems using stablecoins
Key Requirements
- Systemic payment systems must comply with Payment Systems Regulator requirements
- Stablecoin issuers and wallet providers subject to FCA regulation
- Prudential standards equivalent to e-money institutions
- Safeguarding of customer funds
- Redemption at par on demand
Licensing Approach
Multi-regulator approach:
1. FCA: Conduct and prudential regulation
2. Bank of England: Systemic stability oversight
3. PSR: Payment systems regulation
Capital & Reserve Requirements
- Minimum own funds requirements similar to e-money firms
- 100% safeguarding of customer funds
- Reserve assets in high-quality liquid assets
- Additional capital buffers for systemic firms
Singapore
Regulatory Framework
BLOOM Initiative & Payment Services Act
Regulatory framework for digital payment token services and stablecoins
Key Requirements
- License required for digital payment token services
- Robust governance and risk management frameworks
- Technology and cyber risk management standards
- AML/CFT compliance requirements
- Consumer protection measures
Licensing Approach
MAS licensing:
1. Standard Payment Institution License
2. Major Payment Institution License (for larger operations)
Single-currency stablecoins receive favorable treatment
Capital & Reserve Requirements
- Base capital: S$250,000 to S$1 million depending on license type
- Safeguarding of customer assets required
- Reserve assets held with licensed financial institutions
- Regular attestations by independent auditors
Global Standards
Regulatory Framework
FSB & FATF Frameworks
International standard-setting bodies for financial stability and AML/CFT
Key Requirements
- FSB: High-level recommendations for stablecoin arrangements
- Governance, risk management, data storage, redemption, stabilization mechanisms
- FATF: “Travel Rule” for virtual asset transfers
- Customer due diligence and beneficial ownership identification
Licensing Approach
Principles-based approach:
FSB and FATF provide guidance, not direct licensing
Implementation through national regulators
Capital & Reserve Requirements
- FSB recommends “same activity, same risk, same regulation” principle
- Capital requirements should be commensurate with risks
- Emphasis on redemption mechanisms and reserve quality
- Cross-border cooperation for systemic arrangements
Key Regulatory Themes Across Jurisdictions
1. Reserve Backing Requirements
All major jurisdictions have converged on requiring 100% reserve backing for stablecoins used in payment systems, with reserves held in high-quality liquid assets. This represents a fundamental safeguard against the type of fractional reserve risks that characterized historical banking crises.
2. Licensing and Authorization
Regulatory approaches diverge significantly in their licensing structures:
- United States: Two-tier system distinguishing between bank and non-bank issuers
- European Union: Product-based approach differentiating e-money tokens from asset-referenced tokens
- United Kingdom: Multi-regulator framework addressing systemic payment systems
- Singapore: Activity-based licensing scaled to operational magnitude
3. Redemption Guarantees
A common thread across all frameworks is the requirement for redemption at par value, though timeframes vary from immediate (EU, UK) to one business day (US). This ensures that payment stablecoins maintain their fundamental characteristic as a store of value and medium of exchange.
4. Systemic Risk Oversight
Jurisdictions are developing mechanisms to identify and regulate systemically important stablecoinA cryptocurrency pegged to a stable asset, such as USD or gold arrangements:
- US GENIUS Act: $10 billion issuance threshold for systemic designation
- EU MiCA: “Significant” token classification with enhanced requirements
- UK: Systemic payment system designation by Bank of England
- Singapore: Tiered licensing based on transaction volumes
What This Means for Off-Bank FX Settlement
The emergence of comprehensive regulatory frameworks creates both opportunities and challenges for off-bank FX settlement providers:
Opportunities
- Regulatory Clarity: Clear frameworks reduce legal uncertainty and enable institutional participation
- Level Playing Field: Consistent standards prevent regulatory arbitrage and promote fair competition
- Consumer Protection: Strong safeguards increase confidence in stablecoin-based payment systems
- Cross-Border Interoperability: Convergent standards facilitate international payment flows
Challenges
- Compliance Complexity: Operating across multiple jurisdictions requires navigating different regulatory regimes
- Capital Requirements: Reserve and own funds requirements create barriers to entry
- Licensing Costs: Multiple licenses may be needed for global operations
- Ongoing Supervision: Regular attestations, audits, and reporting create operational overhead
Strategic Implications
For institutional participants considering off-bank FX settlement solutions:
- Jurisdiction Selection: Choose domiciles with clear, workable regulatory frameworks
- Compliance Infrastructure: Invest in robust systems for reserve management, reporting, and audit
- Partnership Strategy: Consider partnerships with licensed entities rather than direct licensing
- Monitoring Evolution: Track regulatory developments across all relevant jurisdictions
- International Standards: Align with FSB and FATF guidance to anticipate future harmonization
The Path Forward
The regulatory landscape for stablecoin-based FX settlement is moving from fragmentation to convergence. While implementation details vary, core principles around reserve backing, redemption rights, and systemic oversight are becoming universal.
Institutional participants who proactively engage with these frameworks—building compliant infrastructure, establishing relationships with regulators, and adopting best practices—will be well-positioned to capture the efficiency gains of off-bank FX settlement while managing regulatory risk.
The regulatory maturation of this space represents a critical inflection point: the transition from experimental innovation to institutionally viable infrastructure for cross-border payments.
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MCMS Brief • Classification: Public • Sector: Digital Assets • Region: Global
References
- 1. US Congress - “GENIUS Act - H.R. 4766” (April 8, 2025) [Link]
- 2. European Parliament and Council - “EU Markets in Crypto-Assets (MiCA) Regulation” (June 9, 2023) [Link]
- 3. UK HM Treasury - “UK HM Treasury Stablecoin Consultation” (February 1, 2023) [Link]
- 4. Monetary Authority of Singapore - “Monetary Authority of Singapore - BLOOM Initiative” (January 15, 2025) [Link]
- 5. Financial Stability Board - “FSB High-Level Recommendations for Stablecoins” (July 17, 2023) [Link]
Disclaimer: This content is for educational and informational purposes only. It is NOT financial, investment, or legal advice. Cryptocurrency investments carry significant risk. Always consult qualified professionals before making any investment decisions. Make Crypto Make Sense assumes no liability for any financial losses resulting from the use of this information. Full Terms