# Stablecoin risks in the UK — de-pegging, reserves and regulation

Stablecoins are not guaranteed cash equivalents. The FCA set final stablecoin rules on 30 June 2026 as part of the October 2027 regime — including capital and transparency standards. TerraUSD collapsed in 2022. Treat stablecoins as high-risk crypto, not bank money.

## Key facts
- ‘Stable’ describes intent, not a promise.
- Reserves may not be fully backed or liquid.
- FCA final stablecoin rules set 30 June 2026.
- Issuers need FCA authorisation from 25 October 2027.
- Swapping stablecoins is still a CGT disposal.

## How stablecoins work

Most peg to fiat (USD) via reserves, algorithms or both. USDT, USDC and others differ in transparency and regulation.
## When pegs break

TerraUSD lost its dollar peg in 2022, wiping billions. Contagion spread across crypto markets. Holders had no FSCS compensation.
## UK regulatory direction

FCA consultations cover stablecoin issuance, custody and redemption rights. Expect stricter reserve and disclosure rules.
## Tax treatment

Swapping BTC to USDC is a BTC disposal. Holding USDC does not avoid record-keeping. See stablecoins explainer and DeFi tax guide.

## FAQs
### Are stablecoins legal tender?

No. UK legal tender is pound sterling only.

## Sources

- [FCA — Cryptoassets for consumers](https://www.fca.org.uk/consumers/cryptoassets)
- [Bank of England — Stablecoins](https://www.bankofengland.co.uk/financial-stability/digital-assets)

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— Digital Assets UK (https://digital-assets.co.uk/assets/stablecoin-risks-uk/), reviewed 2026-06-23. Source: https://www.fca.org.uk/consumers/cryptoassets