UK FCA Proposes New Stablecoin and Crypto Custody Rules

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The UK Financial Conduct Authority (FCA) has unveiled new proposals addressing stablecoin issuance and crypto custody, inviting comments from the public and industry until May 28, 2025.

This regulatory move highlights the UK’s efforts to enhance its digital asset framework, ensuring stability and safety for consumers, while aligning with international trends following stablecoin disruptions elsewhere.

The UK Financial Conduct Authority has collaborated with the Bank of England to introduce comprehensive rules for stablecoin issuance, emphasizing consumer protection. These proposals require stablecoins to be backed 1:1 with liquid assets.

Stablecoin issuers and crypto custodians in the UK must adhere to new backing requirements, holding secure and liquid assets in a statutory trust. This aims to protect consumers from potential firm failures.

The proposed regulations are expected to affect multiple stakeholders, including the broader financial market, by ensuring a trust-based system. The crypto sector’s integrity is prioritized, potentially influencing investment and innovation.

With the aim of preventing market disruptions, the FCA’s framework could spur changes in how firms operate within the UK. This move reflects a global oversight trend targeting digital assets.

“Crypto is largely unregulated in the UK. We want to strike a balance in support of a sector that enables innovation and is underpinned by market integrity and trust.”
– Nikhil Rathi, Chief Executive, Financial Conduct Authority

These regulatory changes by the FCA may serve as a model, addressing both financial integrity and innovation. Drawing from historical insights and data, the initiatives could bolster trust and establish new industry standards.