The Financial Conduct Authority (FCA) has introduced new proposals aimed at regulating stablecoins, crypto custody, and the financial resilience of cryptoasset firms, fostering a secure and competitive market.

Marking a significant step in the evolution of crypto regulation, these proposals result from extensive discussions, roundtables, and feedback on previous papers.

Stablecoins—cryptoassets designed to maintain a stable value by pegging to one or more fiat currencies—hold promise for improving payment and settlement efficiency, particularly in cross-border transactions. The FCA’s proposed rules seek to ensure that regulated stablecoins preserve their value while providing customers with transparent insights into how their backing assets are managed.

Recognizing the opportunities stablecoins offer to financial services and the wider economy, the FCA plans to integrate a specific focus on stablecoins into its innovation programs in the coming months.

David Geale, the FCA’s executive director for payments and digital finance, emphasized: “At the FCA, we have consistently championed innovation that benefits consumers and markets. Currently, crypto remains largely unregulated in the UK. Our goal is to support a sector that fosters innovation while maintaining market integrity and trust.”

To ensure a well-defined regulatory framework for stablecoins, the FCA will collaborate closely with the Bank of England on the upcoming regime.

Sarah Breeden, deputy governor for financial stability at the Bank of England, stated: “We welcome the FCA’s proposals as a foundational step in developing the UK’s stablecoin regime. For stablecoins operating at systemic scale, the Bank of England will publish a complementary consultation paper later this year, addressing industry feedback on allowing returns on backing assets. Our continued partnership with the FCA will safeguard the integrity of the UK’s stablecoin ecosystem, including the transition process for firms.”

Under these proposals, crypto custody providers—who play a crucial role in safeguarding consumer assets—must ensure secure storage and immediate accessibility of crypto holdings. Additionally, the proposals aim to mitigate risks and impacts of firm failures within the regulated landscape of stablecoin issuance and cryptoasset custody.

These developments follow the draft legislation published by HM Treasury in April 2025. Stakeholders have until 31 July 2025 to submit feedback, with final regulations set for publication in 2026.