UK FCA Invites Industry Feedback on Stablecoins and Crypto Custody Regulations – FinanceFeeds
The UK Financial Conduct Authority has released a new set of proposals regarding the regulation of stablecoins, the custody of cryptoassets, and the financial resilience requirements for digital asset firms. This initiative represents a significant advancement toward a regulatory framework that fosters both innovation and consumer protection within the crypto industry.
This recent consultation follows a succession of roundtables and feedback sessions that stemmed from earlier discussion papers. The FCA aims to establish a stable, competitive environment that allows firms to operate with reliability and transparency.
Stablecoins, designed to maintain their value by referencing one or more fiat currencies, are viewed by the regulator as a promising tool to enhance efficiency in cross-border payments and settlement processes. The proposed regulations will mandate that issuers of regulated stablecoins provide clear, consistent backing for their assets and deliver transparent disclosures concerning the management of those assets to consumers.
“Currently, crypto is predominantly unregulated in the UK”
David Geale, executive director for payments and digital finance at the FCA, stated, “At the FCA, we have consistently supported innovation that benefits consumers and markets. Currently, crypto is predominantly unregulated in the UK. Our aim is to find a balance that supports a sector fostering innovation while being grounded in market integrity and trust.”
As part of its strategy, the FCA is exploring the introduction of a dedicated pathway for stablecoin-focused firms through its innovation services. This initiative will be investigated in the upcoming months.
The Bank of England plans to collaborate with the FCA to establish a coherent and multi-layered regulatory framework. For stablecoins anticipated to function at a systemic scale, the Bank intends to issue a complementary consultation later this year.
Sarah Breeden, deputy governor for financial stability at the Bank of England, remarked, “We welcome the proposals published by the FCA as part of the development of the UK’s stablecoin framework. For those stablecoins that are expected to operate at a systemic scale, the Bank of England will release a complementary consultation paper later this year, addressing industry feedback regarding the allowance of some returns on backing assets. We continue to work closely with the FCA to ensure the integrity of the UK’s stablecoin regime, including how firms transition within this framework.”
The FCA’s proposals also apply to crypto custody providers. These firms will need to adhere to security standards that ensure customer assets are protected and remain accessible at all times. The regulations aim to mitigate the risk of disruptions caused by firm failures, especially for those involved in stablecoin issuance and custody operations.
This policy consultation follows HM Treasury’s draft legislation published in April 2025. Feedback on the FCA’s consultation papers CP25/14 and CP25/15 is due by 31 July 2025, with final rules anticipated in 2026.
The FCA reaffirmed its ongoing collaboration with HM Treasury, the Bank of England, international partners, and market participants to create a balanced regulatory framework. The regulator remains dedicated to promoting innovation in digital finance while ensuring financial stability and consumer protection.
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