The United Kingdom’s Financial Conduct Authority (FCA) has unveiled new regulatory proposals aimed at bringing stablecoins and crypto asset custody services under formal oversight. Released in a consultation paper, the FCA’s framework requires stablecoin issuers to maintain reserves with independent custodians and guarantees users the right to redeem tokens at par value by the next business day. This measure seeks to enhance user protection and provide transparent information about how reserves are managed.
David Geale, FCA’s executive director for payments and digital finance, emphasized the importance of supporting innovation while preserving market trust in the still largely unregulated UK crypto space. Parallel initiatives by the Bank of England focus on setting rules for systemic stablecoins significant enough to impact financial stability, with a related consultation expected later in the year.
Alongside stablecoin rules, the FCA introduced new expectations for crypto custodians to maintain continual user asset access and implement robust safeguards against business failures. These proposals respond to recent high-profile collapses exposing vulnerabilities in customer fund protections, amid growing governmental pressure for tighter crypto sector regulations.
UK Chancellor Rachel Reeves has highlighted efforts to establish a full-scale digital asset regulatory framework, including mandatory collection and reporting of comprehensive customer data on all crypto trades and transfers beginning January 1, 2026, enhancing tax transparency. Public consultation on the FCA’s proposals is open until August 2025, inviting feedback from stablecoin issuers, payment providers, crypto custody platforms, industry groups, auditors, professional advisers, and consumer representatives.