United Kingdom regulators are citing the response to the recent $6.3 billion Binance hack as a primary justification for implementing new rules that would grant authorities direct power to freeze stablecoin assets. The Federal Bureau of Investigation attributed the breach to North Korea, marking it as the largest cryptocurrency heist on record.
While private issuers acted quickly to secure funds, industry observers and policymakers argue that statutory powers are necessary to ensure consistent and enforceable asset recovery in future incidents. The Financial Conduct Authority published its cryptoassets regime in June, with implementation scheduled for 25 October 2027.
Rapid response freezes billions
Approximately $2.85 billion of the stolen funds have been frozen, with 94% of that amount held in stablecoins. The speed of the response highlighted the central role these assets play in illicit fund movements and their subsequent containment.
Less than an hour after the hack began, attackers sold $325 million worth of stolen Tether (USDT) for Ether. Tether issued its first major freeze just 37 minutes after the stolen funds reached the hackers’ main wallet. Circle, the issuer of USD Coin (USDC), blocked the movement of its stablecoin three minutes later.
Legal challenges and regulatory gaps
The reliance on private companies to freeze assets has drawn legal scrutiny and highlighted potential gaps in consumer protection and due process. Circle is facing a proposed class action from Drift Protocol investors who allege the firm failed to freeze around $230 million in stolen USDC following a separate hack in April.
Tether is also dealing with litigation in New York, where two businessmen claim the company froze millions of their assets months before a seizure warrant existed. Tether has responded to the lawsuit by calling the allegations baseless.
To address systemic risks, the Bank of England is finalizing its Code of Practice for systemic stablecoin issuers by the end of this year. These developments occur as the UK prepares to bring its broader cryptoassets regulatory framework into force next year.
