UK FCA Seeks Public Input on Stablecoin and Crypto Custody Rules

The United Kingdom’s financial regulator, the Financial Conduct Authority (FCA) has asked the public to provide feedback on proposed regulations on cryptocurrency and stablecoins.

The FCA announced this update in a May 28 press release, outlining new proposals that businesses must comply with before launching stablecoins or providing crypto custody services. In the statement, the UK financial regulator highlighted its collaboration with the Bank of England to develop a clear and comprehensive regulatory framework for stablecoins.

In the draft regulations, the FCA is advocating for stablecoins to maintain a consistent and stable value. To support this goal, issuers will be required to disclose to clients how the assets backing these stablecoins are managed.

These regulatory plans have been described as “the latest milestone on the road to crypto regulation.” They stem from previous consultations and feedback from industry stakeholders.

The proposals are expected to require firms to meet specific standards that make sure their crypto custody services remain secure and accessible. The overarching aim is to minimize the risk of crypto firms collapsing and to mitigate the impact if they do.

The public has until July 31, 2025, to provide feedback, and the FCA intends to finalize the rules in 2026.

David Geale, the FCA’s executive director of payments and digital finance, stated that the regulator is committed to fostering innovation that benefits both consumers and markets. He emphasized the need to strike a balance between supporting a growing sector and maintaining market integrity and trust, especially as crypto remains largely unregulated in the UK.

FCA’s Partnership With the Bank of England

The Bank of England’s Deputy Governor for Financial Stability, Sarah Breeden, confirmed that the Bank supports the FCA’s proposals for shaping the UK’s stablecoin regime. She noted that both institutions are working closely to uphold the integrity of the framework, including overseeing how firms transition into the new regulatory environment.

Breeden also mentioned that for stablecoins expected to operate at a systemic scale, the Bank of England will release a complementary consultation paper later this year. This forthcoming document will address industry feedback, particularly regarding the potential for allowing a return on the assets backing these stablecoins.

In addition to its stablecoin proposals, the FCA introduced a revised set of rules for firms involved in crypto custody, which are detailed in a separate discussion paper. This follows the regulator’s earlier request for public input on proposed rules concerning decentralized finance (DeFi) offerings.

This update comes shortly after the UK government, earlier in May, confirmed it would not establish a national crypto reserve or hold Bitcoin BTC $96 611 24h volatility: 2.1% Market cap: $1.92 T Vol. 24h: $29.09 B in state accounts.

Instead, it emphasized collaboration with the US and the use of blockchain for sovereign debt issuance, distancing itself from the EU’s MiCA approach in favor of traditional financial regulation.

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