Regulators in the UK have taken a step closer to
formal crypto oversight. The Financial Conduct Authority (FCA) has opened consultations on new rules governing stablecoins and the custody of
digital assets. The proposals are part of an effort to establish a
safer, more transparent environment for crypto services, while still enabling
innovation in the sector.
A New Phase in Crypto Regulation
The FCA’s latest move targets firms issuing
stablecoins, crypto assets pegged to fiat currencies, and those safeguarding
consumer crypto assets. The proposed framework would require issuers to
maintain stable value through appropriate asset backing and ensure transparency
in how these assets are managed.
Custodians would need to keep crypto assets secure and
accessible, minimizing the risks of customer loss or delayed access.
According to the FCA, the proposals stem from months
of consultation, roundtables, and feedback from earlier discussion papers. The
regulator emphasized the importance of building a system that fosters
innovation while maintaining integrity and trust in the market.
“We welcome the proposals the FCA have published as
part of building the UK’s stablecoin regime. For those stablecoins that expect
to operate at systemic scale, the Bank of England will publish a complementary
consultation paper later this year, including responding to industry feedback
around allowing some return on backing assets,” commented Sarah Breeden, deputy
governor for financial stability at the Bank of England.
“We continue to work closely with the FCA to ensure
the integrity of the UK’s stablecoin regime, including how firms transition
within the regime.”
Collaboration With the Bank of England
The FCA’s approach is part of a broader regulatory
initiative involving the Bank of England, which is preparing a parallel
consultation focused on stablecoins expected to reach systemic scale.
The Bank of England will publish its own consultation
later this year, potentially addressing the industry’s calls to allow returns
on the assets backing certain stablecoins.
Stablecoins have the potential to make cross-border
payments faster and cheaper by leveraging blockchain technology. Recognizing
this potential, the FCA plans to add stablecoins to its innovation services,
potentially giving fintech firms new tools to explore compliant offerings
within a supportive regulatory environment.
The FCA’s consultation follows the UK Treasury’s draft
legislation issued in April 2025. Stakeholders can submit feedback on the
proposals until 31 July 2025. The regulator plans to finalize and publish the
rules in 2026.
As the UK builds out its stablecoin regime, the
current consultations mark a crucial point in setting the direction for crypto
asset firms operating in the country.
Regulators in the UK have taken a step closer to
formal crypto oversight. The Financial Conduct Authority (FCA) has opened consultations on new rules governing stablecoins and the custody of
digital assets. The proposals are part of an effort to establish a
safer, more transparent environment for crypto services, while still enabling
innovation in the sector.
A New Phase in Crypto Regulation
The FCA’s latest move targets firms issuing
stablecoins, crypto assets pegged to fiat currencies, and those safeguarding
consumer crypto assets. The proposed framework would require issuers to
maintain stable value through appropriate asset backing and ensure transparency
in how these assets are managed.
Custodians would need to keep crypto assets secure and
accessible, minimizing the risks of customer loss or delayed access.
According to the FCA, the proposals stem from months
of consultation, roundtables, and feedback from earlier discussion papers. The
regulator emphasized the importance of building a system that fosters
innovation while maintaining integrity and trust in the market.
“We welcome the proposals the FCA have published as
part of building the UK’s stablecoin regime. For those stablecoins that expect
to operate at systemic scale, the Bank of England will publish a complementary
consultation paper later this year, including responding to industry feedback
around allowing some return on backing assets,” commented Sarah Breeden, deputy
governor for financial stability at the Bank of England.
“We continue to work closely with the FCA to ensure
the integrity of the UK’s stablecoin regime, including how firms transition
within the regime.”
Collaboration With the Bank of England
The FCA’s approach is part of a broader regulatory
initiative involving the Bank of England, which is preparing a parallel
consultation focused on stablecoins expected to reach systemic scale.
The Bank of England will publish its own consultation
later this year, potentially addressing the industry’s calls to allow returns
on the assets backing certain stablecoins.
Stablecoins have the potential to make cross-border
payments faster and cheaper by leveraging blockchain technology. Recognizing
this potential, the FCA plans to add stablecoins to its innovation services,
potentially giving fintech firms new tools to explore compliant offerings
within a supportive regulatory environment.
The FCA’s consultation follows the UK Treasury’s draft
legislation issued in April 2025. Stakeholders can submit feedback on the
proposals until 31 July 2025. The regulator plans to finalize and publish the
rules in 2026.
As the UK builds out its stablecoin regime, the
current consultations mark a crucial point in setting the direction for crypto
asset firms operating in the country.
