TLDR
- FCA opens public consultation to shape new UK regulations for stablecoins and crypto custody services by 2026.
- Stakeholders, including issuers, custodians, and legal experts, are invited to submit feedback by July 31, 2025.
- Proposals aim to boost payment efficiency while enforcing transparency and reserve requirements for stablecoins.
- FCA emphasizes the need for strong governance and risk controls in crypto custody to protect digital assets.
- Bank of England is to release a separate consultation for stablecoins later in 2025.
The Financial Conduct Authority (FCA) has opened a public consultation on new rules for stablecoins and crypto custody services. This move aligns with the United Kingdom’s strategy to finalize its digital asset regulatory framework by 2026. The FCA’s initiative aims to gather insights from stakeholders to ensure a balanced and clear approach to crypto regulation.
The consultation period will run until July 31, 2025, and applies to firms and individuals across the crypto and financial sectors. The FCA’s proposals follow the UK Treasury’s draft legislation published in April 2025, which outlined the government’s intent. Through this process, the FCA seeks to support crypto innovation while maintaining market integrity and consumer trust.
Public participation will help the FCA design rules that encourage responsible growth and ensure transparency in stablecoin issuance and crypto custody. This effort reflects the UK’s broader objective to become a competitive global hub for digital finance. The FCA’s consultation complements work by the Bank of England on systemic digital assets.
FCA Sets Rules for Stablecoin Issuers
The FCA proposes a regulatory framework to govern the issuance and use of stablecoins in UK payment systems. The regulator emphasizes that clear and verifiable reserves should back stablecoins to protect users. Issuers must disclose how reserves are managed and how redemption processes will function during stress scenarios.
The FCA sees potential in stablecoins for enhancing the speed and cost-efficiency of payments and settlements across financial networks. However, the regulator underlines the need for safeguards that prevent market disruptions and protect financial stability. It aims to strike a balance between fostering innovation and ensuring robust oversight.
Stablecoin issuers planning to operate in the UK must follow rules covering capital requirements, redemption rights, and reserve disclosures. The FCA wants to prevent any ambiguity regarding user rights and how stablecoins retain their value. These standards will apply to firms offering stablecoin services for domestic and cross-border payments.
Crypto Custody Under Review for Security and Accountability
The FCA also seeks feedback on its approach to regulating crypto custody services, focusing on asset protection and operational soundness. Custodians must adopt systems that secure private keys, separate client assets, and provide regular reporting to clients and regulators. Firms handling crypto custody will be subject to conduct rules and risk management obligations.
Under the proposals, the FCA wants firms to implement effective governance structures that limit access and prevent unauthorized transactions. These requirements aim to reduce the risk of fraud, cyber breaches, and operational failures in crypto custody. Firms must also maintain insurance coverage or other protections against loss of digital assets.
The FCA is engaging crypto custody providers, legal advisers, auditors, and trade associations to ensure diverse perspectives shape the final rules. This collaborative approach helps the FCA identify practical challenges and align oversight with market realities. Feedback collected will form the basis of detailed regulations expected to take effect from 2026.
