UK FCA’s Stablecoin Consultation

The UK’s Financial Conduct Authority (FCA) has launched a consultation on proposed rules for stablecoin issuance and crypto-asset custody, marking a significant step in the country’s approach to digital asset regulation. The consultation, published on May 28, 2025, seeks to develop a safe, competitive, and sustainable crypto-asset sector that fosters innovation while ensuring market integrity and consumer protection. (fca.org.uk)

Proposed Rules for Stablecoin Issuance

The FCA’s consultation paper, CP25/14, outlines proposed requirements for issuing qualifying stablecoins. Qualifying stablecoins are crypto-assets designed to maintain a stable value by referencing one or more fiat currencies. The proposed rules aim to ensure that these stablecoins remain stable and that consumers receive clear information on how the backing assets are managed. (fca.org.uk)

Investor Identification, Introduction, and negotiation.

Key Proposals for Stablecoin Issuers

• Backing Assets: Issuers must maintain a backing asset pool equivalent to the value of all outstanding stablecoins. This pool should consist primarily of high-quality, liquid, low-risk assets, such as on-demand bank deposits and short-term government debt instruments. At least 60% of the pool must be made up of the most liquid and secure instruments. (paymentexpert.com)

• Redemption Rights: Holders must have the legal right to redeem their stablecoins at par value on demand. Issuers are required to honor redemption requests promptly, with funds returned to consumers no later than the following business day. (paymentexpert.com)

• Transparency: Issuers must provide clear and timely information about how reserves are managed and how redemptions work in practice. Regular disclosures should include the number of coins in circulation, the types of assets held in reserve, and any material changes to the redemption process. (paymentexpert.com)

Proposed Rules for Crypto-Asset Custody

The FCA’s consultation paper, CP25/15, focuses on proposed prudential rules and guidance for firms involved in crypto-asset custody. The aim is to develop a safe, competitive, and sustainable crypto-asset sector that enables innovation while ensuring market integrity and consumer protection. (fca.org.uk)

Key Proposals for Crypto-Asset Custodians

• Segregation of Assets: Custodians must segregate client crypto-assets from their own and hold them in a trust, which the FCA proposes is a non-statutory trust. (taylorwessing.com)

• Record-Keeping: Custodians are required to maintain accurate, client-specific records that are independent of blockchain data, covering asset type, amount, wallet location, and claims. (taylorwessing.com)

• Operational Resilience: Custodians must have adequate organizational arrangements and governance to ensure the safeguarding of client assets. (taylorwessing.com)

Industry Reactions and Next Steps

The FCA’s consultation has garnered attention from various stakeholders. Industry leaders have expressed support for the proposed regulations, viewing them as a positive step toward integrating digital assets into the UK’s financial system. The consultation period runs until July 31, 2025, with the FCA expected to publish final rules in 2026. (fca.org.uk)

The FCA continues to work closely with the Bank of England on the upcoming regime to ensure a clear pathway in regulation for stablecoins. (fca.org.uk)

As the consultation period progresses, stakeholders are encouraged to review the proposed rules and provide feedback to help shape the future of crypto-asset regulation in the UK.

References

• Financial Conduct Authority. (2025). CP25/14: Stablecoin issuance and cryptoasset custody. (fca.org.uk)

• Financial Conduct Authority. (2025). CP25/15: A prudential regime for cryptoasset firms. (fca.org.uk)

• Financial Conduct Authority. (2025). FCA seeks further views on stablecoins and crypto custody. (fca.org.uk)

• Charles Russell Speechlys LLP. (2025). FCA Crypto Consultations: What Stablecoin and Custody Firms Need to Know. (charlesrussellspeechlys.com)

• PwC UK. (2025). FCA sets out proposals on stablecoin issuance cryptoasset custody and capital requirements. (pwc.co.uk)

• Hogan Lovells. (2025). UK: FCA consults on stablecoin issuance and cryptoasset custody rules. (hoganlovells.com)

• Taylor Wessing. (2025). FCA cracks on with crypto roadmap. (taylorwessing.com)

• Skadden, Arps, Slate, Meagher & Flom LLP. (2023). A New Regime Governing Stablecoins. (skadden.com)

• Skadden, Arps, Slate, Meagher & Flom LLP. (2025). UK FCA Publishes Consultation Paper on a Prudential Regime for Cryptoasset Firms. (skadden.com)

• PaymentExpert.com. (2025). FCA proposes 1:1 backing for UK stablecoins. (paymentexpert.com)

• DLA Piper. (2025). UK’s FCA consults on new regulatory regime for stablecoin issuance and crypto custody. (dlapiper.com)