Key Insights
- The UK’s FCA has proposed new rules to regulate stablecoin issuance, crypto custody services, and financial resilience of cryptoasset firms.
- The measures aim to ensure value stability, transparency, and consumer protection in the rapidly growing crypto market.
- The Bank of England will issue complementary proposals for systemically important stablecoins later in 2025; final FCA rules are expected in 2026.
LONDON (MarketsXplora) – Britain’s Financial Conduct Authority (FCA) on Wednesday published detailed proposals aimed at regulating stablecoin issuance, crypto custody, and the financial resilience of firms operating in the cryptoasset sector, marking another significant step toward establishing a comprehensive regulatory framework for digital assets in the UK.
The newly released consultation paper outlines requirements designed to support a safe and competitive environment for cryptoassets, particularly focusing on stablecoins—digital tokens that seek to maintain a stable value by pegging to one or more fiat currencies.
What’s behind the FCA’s stablecoin push?
The FCA’s proposals are the culmination of months of stakeholder engagement, including industry roundtables and responses to prior discussion papers. The regulator says the planned rules will require that regulated stablecoins maintain their value through effective asset backing, while firms must provide transparent information about how those backing assets are managed.
“Stablecoins have the potential to drive efficiency in payments and settlement using blockchain technology, particularly across borders,” the FCA said in a statement.
To help foster these benefits, the agency plans to explore the inclusion of stablecoin-focused initiatives within its innovation services in the coming months.
David Geale, Executive Director for Payments and Digital Finance at the FCA, emphasized the regulator’s dual focus on innovation and integrity.
“At the FCA, we have long supported innovation that benefits consumers and markets,” Geale said. “At present, 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.”
The regulatory roadmap is being coordinated with the Bank of England, which will oversee stablecoins deemed to have systemic importance. Sarah Breeden, Deputy Governor for Financial Stability at the Bank, welcomed the FCA’s proposals and announced that the central bank would publish a complementary consultation later this year. That paper will address, among other issues, industry feedback on allowing a return on backing assets held by systemic stablecoin issuers.
“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,” Breeden said.
Related! 12% of UK Adults Now Own Cryptocurrency, FCA Study Reveals
What do the rules mean for crypto storage firms?
The FCA’s proposals also target crypto custody services, mandating that firms entrusted with safeguarding digital assets implement effective security measures and ensure continuous customer access to their holdings.
The rules are also aimed at reducing the risks and consequences of potential firm failures among regulated entities engaged in stablecoin issuance and cryptoasset custody.
The publication follows HM Treasury’s draft legislation issued in April 2025 and forms part of the UK government’s broader effort to bring cryptoassets within the perimeter of financial regulation. Stakeholders have until July 31, 2025, to submit their feedback. The FCA said it expects to finalise and publish the rules in 2026.