The UK’s Financial Conduct Authority (FCA) has announced new proposals to regulate stablecoins, crypto custody, and financial resilience for cryptoasset firms. This move aims to create a secure and competitive crypto sector, as revealed in a report today. The FCA is seeking public feedback by July 31, 2025, to shape these rules. These proposals mark a significant step toward a comprehensive UK crypto regulatory framework.
What Triggered the Proposals?
The FCA’s proposals focus on stablecoin issuance, crypto custody services, and ensuring crypto firms have robust financial stability measures. Accordingly, stablecoin issuers must hold reserve assets and disclose how these assets are managed to maintain value stability.
The FCA’s proposals were triggered by a surge in UK crypto ownership, with 12% of adults holding digital assets in 2024, up from 4% in 2021. High-profile scams and fraud, including an increase in borrowed funds for cryptocurrency purchases, prompted action to curb financial crime. The Financial Services and Markets Act 2023 laid the groundwork, expanding FCA oversight to include crypto activities such as trading platforms and custody.
What the Proposals will Achieve
The FCA seeks to enhance market trust by ensuring stablecoins maintain their value and protect consumers from financial losses. The proposals aim to reduce the risks of crypto firm failures through strong governance and operational standards. By setting clear rules, the FCA aims to promote sustainable growth in the UK’s crypto sector. These measures are expected to boost investor confidence and encourage responsible innovation in digital assets. The FCA plans to finalize these rules in 2026 after public consultation
Meanwhile, some notable names have reportedly thrown their weight behind the proposals. For example, Rachel Reeves, Chancellor of the Exchequer, announced the draft legislation at the Innovate Finance Global Summit, emphasizing the importance of consumer protection and innovation. Tulip Siddiq, Economic Secretary to the Treasury, confirmed the government’s commitment to prior crypto proposals in a November 2024 speech.
Additionally, Nikhil Rathi, FCA Chief Executive, supports easing regulations to spur innovation, aligning with the government’s growth strategy. Sarah Breeden, Deputy Governor of the Bank of England, endorsed stablecoin regulation to enhance the safe use of digital payments. These formidable supports clear the FCA’s roadmap, making adoption possible.
The FCA will work closely with the Bank of England on the upcoming regime to ensure a clear regulatory pathway for stablecoins.
