The FCA has published proposals for a prudential regime for cryptoasset firms as well as proposals for issuing stablecoins, crypto custody and financial resilience of cryptoasset firms, with the aim of supporting a safe, competitive sector.
Prudential regime
The proposals for the prudential regime set out the risks the FCAs want to prevent, the outcomes it wants for consumers and markets and the proposals it seeks to implement. The FCA is proposing what it says will be appropriate standards that are proportionate, and which it will expect firms to meet. Its proposed regime aims to bring certainty, and firms and consumers will be able to place trust in qualifying stablecoins. The FCA has not included proposed requirements for firms carrying out payments using qualifying stablecoins. However, as use cases are developed, it anticipates that the Treasury will bring retail payments made with qualifying stablecoins within its perimeter.
The FCA's long-term plan is to establish an integrated prudential sourcebook which draws together the key prudential requirements that are common to the various types of firm the FCA prudentially regulates. The FCA will supplement this with sector-specific sourcebooks that build on the common requirements, depending on the specific activity. The FCA is not consulting on all requirements at the moment and will consult on the remaining requirements in due course.
Stablecoins, crypto custody and resilience
Stablecoins are cryptoassets that aim to maintain a stable value by referencing one or more fiat currencies (a currency backed by a government such as GBP or USD). Stablecoins have the potential to drive efficiency in payments and settlement using blockchain technology, including cross-border transactions. The FCA's proposed rules aim to ensure regulated stablecoins maintain their value. They also mean that customers should be provided with clear information on how the backing assets are being managed.
To support the opportunities stablecoins present to financial services and the broader economy, the FCA will explore adding a specific focus on stablecoins to its innovation services in the coming months.
The FCA says that it will work closely with the Bank of England to clarify how the transition within the regime will work in practice and how any risks can be managed.
The FCA will require qualifying stablecoin issuers to:
- back qualifying stablecoins with secure, liquid assets in a statutory trust for qualifying stablecoin holders. These backing assets should be held with a third-party custodian who is not in the issuer's group;
- offer redemption of qualifying stablecoins in exchange for money to all holders. Payment orders to transfer redeemed funds to qualifying stablecoin holders should be placed at the latest by the end of the next business day following receipt of a redemption request; and
- clearly disclose their policy for redemption and the composition of backing assets to consumers.
Custodians of qualifying cryptoassets will be required to:
- segregate client cryptoassets from their own;
- hold those qualifying cryptoassets on behalf of clients in a trust;
- have accurate books and records of clients' cryptoassets holdings; and
- have adequate controls and governance to protect clients' cryptoassets holdings.
Next steps
The proposals follow HM Treasury's draft legislation published in April 2025. The deadline for feedback is 31 July 2025. The FCA says that it will publish final rules in 2026.
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