Blockworks

The UK government is preparing to announce expanded cooperation with the United States on cryptocurrency regulation, the Financial Times reported on Tuesday.



The move would <a href="https://www.ft.com/content/3b814ced-16f5-45f4-815d-cbfb8d2c63a6">align</a> oversight frameworks and strengthen supervision of digital asset markets, which have grown significantly in both jurisdictions. Coordination will likely focus on market conduct, anti-money laundering (AML) standards, and stablecoin regulation, areas where fragmented approaches have raised concerns among policymakers.



The UK has positioned itself as a potential global hub for digital assets, with recent legislation covering stablecoins and digital settlement assets. The nation’s draft crypto-asset regime, <a href="https://www.addleshawgoddard.com/en/insights/insights-briefings/2025/financial-regulation/financial-regulation-in-the-know-payments-june-2025/long-awaited-draft-framework-uk-regulatory-regime-cryptoassets-has-arrived/">published</a> in April 2025, is a key piece of the <a href="https://assets.publishing.service.gov.uk/media/680f6387faff81833fcae94b/0302425_draft_RAO_SI.pdf">backdrop</a> to these US-UK coordination talks.



Under the draft Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, the government would formally bring “qualifying cryptoassets” and “qualifying stablecoins” under the regulatory perimeter of the Financial Conduct Authority (FCA). The reforms include proposals for conduct and prudential requirements for firms issuing stablecoins and for custodians safeguarding cryptoassets.



In the US, meanwhile, the passage of the GENIUS Act in July 2025 sets out one of the first comprehensive federal regulatory frameworks specifically for stablecoins, including detailed rules on reserve backing, audits, and transparency.



A coordinated transatlantic approach could reduce regulatory arbitrage, where firms exploit gaps between jurisdictions. The announcement comes at a time when several countries, including members of the EU and Asia-Pacific, are finalizing their own crypto rulebooks. Alignment between the US and UK may pressure other jurisdictions to harmonize standards.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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arbitrage

UK set to announce closer crypto cooperation with US: FT

Jack Kubinec

Aave’s recently-launched stablecoin is struggling to stay stable, and one researcher believes current efforts to fix it will fall short.&nbsp;



The Aave DAO passed two Snapshot proposals last week aimed in part at helping GHO achieve its intended dollar peg. However, Vaidya Pallasena, the ratings director at stablecoin ratings agency Bluechip, thinks both are doomed to fail.



“In its current form, [GHO] cannot maintain its peg,” Pallasena said in an interview with Blockworks.



Stablecoins are one of the most popular use cases in crypto, and GHO was <a href="https://app.aave.com/governance/proposal/268/">meant</a> to bring additional borrowing revenue to Aave. But <a href="https://blockworks.co/news/aave-stablecoin-gho-mainnet-launch">since the token’s July launch</a>, GHO still has yet to reach its $1 peg, with <a href="https://aave.tokenlogic.com.au/">trading</a> at around $0.98 at the time of writing.&nbsp;



Pallasena thinks the peg problem can only be solved by allowing users to exchange GHO for their underlying collateral — thereby letting arbitrage bring the price to $1.&nbsp;



De-pegged stablecoins are ordinarily a tough sell for investors, but Pallasena said users are borrowing GHO despite its price woes because of a popular levered trade that creates exposure to the 5% yield on Maker’s popular sDAI token.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The new frontier of DeFi🧐 Earn 11%+ APY on <a href="https://twitter.com/search?q=%24DAI&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$DAI</a> with RWA yield👇 Dai savings rate (DSR) on Maker is paying out 5% APY. Yield is revenue generated from the DAI collateral that&#39;s in real world assets such as US t-bills. There is further a proposal live on <a href="https://twitter.com/AaveAave?ref_src=twsrc%5Etfw">@AaveAave</a> to enable… <a href="https://t.co/Xv1z752wE1">pic.twitter.com/Xv1z752wE1</a>&mdash; Thor⚡️Hartvigsen (@ThorHartvigsen) <a href="https://twitter.com/ThorHartvigsen/status/1694255201010516070?ref_src=twsrc%5Etfw">August 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Aave governance has proposed a slew of reforms meant to bring GHO in line with its peg. At the start of September, Aave <a href="https://snapshot.org/#/aave.eth/proposal/0x4b6c0daa24e0268c86ad1aa1a0d3ee32456e6c1ee64aaaab3df4a58a1a0adc04">increased</a> GHO’s borrow rate from 1.5% to 2.5%. Aave passed a Snapshot on Thursday to fund a “liquidity committee” that would <a href="https://snapshot.org/#/aave.eth/proposal/0x556aa2b8439dba5929e613fb5515279d8396621e71fba058912434a60751fbd4">increase</a> GHO’s liquidity on Balancer, Maverick and Uniswap. On Friday, a proposal passed <a href="https://snapshot.org/#/aave.eth/proposal/0x225c33775892d959715f85e0c3edb61966fe7e67b1dd474d0ee28fea533dc2c9">boosting</a> yield on GHO liquidity pools to incentivize deposits.&nbsp;



Pallasena said while rate tweaks and liquidity spending can nudge the peg, they aren’t ultimately sustainable because it can still be profitable to mint underpriced GHO and trade it elsewhere. Instead, Aave should make it possible for users to redeem their collateral against their GHO, receiving a dollar in exchange for $0.98 — and moving the peg to $1.



“Facilitating arbitrage. That’s the best way to do it,” Pallasena said.



Aave passed a proposal <a href="https://governance.aave.com/t/temp-check-gho-stability-module/13927/1">implementing</a> a MakerDAO-esque “GHO stability module” over the summer, which would allow users to convert between stablecoins based on arbitrage incentives. The GSM is currently undergoing <a href="https://governance.aave.com/t/gho-stability-module-update/14442">audits</a> and does not yet have an official release date.



Multiple Aave representatives could not be reached by press time.



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Aave

GHO ‘cannot maintain its peg’ without changes, says researcher

Liz Coyne

arbitrage

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