The Financial Conduct Authority (FCA) has unveiled proposals for a prudential regime for cryptoasset firms, aiming to create a safe and competitive sector. The regime will cover the issuance of stablecoins, crypto custody, and the financial resilience of cryptoasset firms.
Prudential Regime
The FCA’s proposed prudential regime outlines the risks it seeks to mitigate, the desired outcomes for consumers and markets, and the measures it plans to implement. The authority aims to establish proportionate standards that firms will be expected to meet, bringing certainty to the industry and fostering trust in qualifying stablecoins.
The FCA has refrained from including proposed requirements for firms using qualifying stablecoins for payments, anticipating that the Treasury will incorporate retail payments made with these stablecoins into its regulatory perimeter as use cases evolve. The long-term goal is to create an integrated prudential sourcebook that consolidates key prudential requirements for various types of firms regulated by the FCA.
Stablecoins, Crypto Custody, and Resilience
Stablecoins are cryptoassets designed to maintain a stable value by referencing one or more fiat currencies. The FCA’s proposed rules aim to ensure that regulated stablecoins maintain their value and that customers receive clear information about the management of backing assets.
To support the opportunities presented by stablecoins, the FCA will explore adding a specific focus on these assets to its innovation services in the coming months. The authority will collaborate closely with the Bank of England to clarify the transition process within the regime and manage potential risks.
The FCA will require qualifying stablecoin issuers to:
- Back qualifying stablecoins with secure, liquid assets held in a statutory trust for stablecoin holders.
- Offer redemption of qualifying stablecoins in exchange for money to all holders within a specified timeframe.
- Clearly disclose their redemption policy and the composition of backing assets to consumers.
Custodians of qualifying cryptoassets will be required to:
- Segregate client cryptoassets from their own.
- Hold client cryptoassets in a trust.
- Maintain accurate records of clients’ cryptoasset holdings.
- Implement adequate controls and governance to protect clients’ cryptoassets.
Next Steps
The proposals follow HM Treasury’s draft legislation published in April 2025, with a deadline for feedback set for 31 July 2025. The FCA plans to publish final rules in 2026. The content of this article is intended to provide a general guide to the subject matter, and specialist advice should be sought regarding specific circumstances.
