The Financial Conduct Authority (FCA) has taken another significant step towards formal cryptoasset regulation with a new set of proposals focusing on stablecoins, crypto custody, and financial resilience. These developments mark a pivotal moment for UK firms looking to operate in the crypto space under a regulated framework.
Published as part of the ongoing rollout of the UK’s crypto regulatory regime, the FCA’s proposals aim to strike a balance between encouraging innovation and ensuring market integrity. The consultation builds on extensive industry engagement and follows HM Treasury’s draft legislation earlier this year.
Clarity for stablecoin issuers and custodians
The proposals set out clear expectations for firms involved in the issuance of fiat-backed stablecoins—digital tokens designed to maintain a stable value by referencing one or more traditional currencies. The FCA recognises the potential for stablecoins to improve payments and settlement processes, particularly in cross-border use cases, and is looking to ensure that the technology develops within a robust regulatory framework.
Under the proposals, stablecoin issuers will need to demonstrate that they can reliably maintain the value of their tokens. Firms will also be required to provide transparent information about how backing assets are held and managed, helping consumers to understand the risks and protections involved.
Strengthened standards for crypto custody
The consultation also introduces new rules for crypto custody service providers—firms responsible for safeguarding customer cryptoassets. These firms will be required to demonstrate that they can secure assets effectively and ensure they remain accessible to customers at all times.
The FCA’s focus on operational resilience is designed to reduce the risk and impact of firm failure, protecting consumers and promoting confidence in the broader crypto ecosystem.
Cross-regulator collaboration and a path forward
The FCA is working closely with the Bank of England to coordinate the regulatory framework, particularly for stablecoins that could operate at systemic scale. A complementary consultation paper from the Bank is expected later this year.
David Geale, executive director for payments and digital finance at the FCA, commented:
“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 FCA has also announced plans to expand its innovation services to include a focus on stablecoins, reinforcing its commitment to supporting firms navigating the evolving regulatory landscape.
Next steps for firms
Firms involved in crypto issuance or custody should carefully review the FCA’s proposals and assess their readiness for the incoming requirements. The consultation is open until 31 July 2025, with final rules expected in 2026.
At Neopay, we’re helping crypto and e-money firms stay ahead of regulatory developments. If your firm is planning to issue stablecoins or provide custody services, now is the time to prepare. Our compliance experts can support you in understanding the FCA’s expectations and implementing the necessary frameworks to operate with confidence.
Get in touch to discuss how we can help you navigate the future of crypto regulation.
