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The UK's Financial Conduct Authority (FCA) is consulting on new rules for stablecoin issuance, crypto-asset custody and the financial resilience of crypto firms, as it continues to develop a comprehensive regulatory framework for the sector.
The new proposals from the financial regulator represent a further step in implementing the Labour government’s plans to regulate crypto-assets.
According to the FCA, the changes are intended to support innovation while ensuring appropriate levels of consumer protection, with the regulator saying that it is seeking feedback by July 31 and plans to finalise the rules in 2026.
“At the FCA, we have long supported innovation that benefits consumers and markets. At present, crypto is largely unregulated in the UK,” said David Geale, FCA chief of payments and digital finance.
“We want to strike a balance in support of a sector that enables innovation and is underpinned by market integrity and trust.”
The FCA’s proposals follow draft legislation published by HM Treasury in April 2025.
Although the Treasury does not plan to bring stablecoins into UK payments regulation at this stage, it has indicated that they could play a role in both wholesale and retail payments in the future, depending on adoption and use cases.
Tougher rules
In its consultation, the regulator is proposing requirements that ensure regulated stablecoins are fully backed by liquid assets held in statutory trusts and that holders can redeem them at par value.
These measures aim to reduce contagion risk while ensuring that consumers have access to their funds even if an issuer fails.
Issuers would need to disclose their redemption policies and backing asset composition clearly, and redemption would have to be made available to all holders, with proceeds transferred no later than the business day after a redemption request is received.
Firms providing crypto-asset custody services would also be required to segregate client assets, hold them in trust and maintain accurate records, while instilling governance and controls to protect those assets, including in insolvency scenarios, echoing the regime for payment services.
In a win for crypto firms, the FCA has further signalled it may expand its innovation services to specifically support stablecoin-related products.
This includes access to regulatory sandboxes and innovation pathways, through which firms can test new services with regulatory support.
At the same time, in line with its Consumer Duty, the FCA also intends the rules to ensure that crypto-asset products deliver fair value, meet consumer needs and come with appropriate protections.
However, crypto firms would be subject to further compliance requirements, which the FCA feels are necessary to address the specific risks posed by their instruments and to uphold trust in their use for payments and as a store of value.
Going forward, the regulator has said that it will monitor how firms adapt to the new regime and plans to assess whether the final framework delivers the intended outcomes for consumers and the wider market.
In a press statement, Sarah Breeden, deputy governor for the Bank of England, welcomed the FCA’s proposals.
“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,” she confirmed.
“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.”
