Catenaa, Friday, May 30, 2025- The United Kingdom’s Financial Conduct Authority released fresh regulatory proposals Tuesday targeting stablecoin issuers and crypto custody providers, seeking public input ahead of finalizing rules expected in 2026.
The FCA’s consultation, open until July 31, 2025, aims to create a balanced regulatory framework that encourages innovation while ensuring market integrity and consumer protection.
The measures will apply to firms issuing stablecoins—cryptocurrencies pegged to fiat currencies like the pound or dollar—and those offering custody services for crypto assets.
David Geale, FCA’s executive director of payments and digital finance, said the regulator supports innovation but stresses the need for trust.
Under the proposals, stablecoin issuers must transparently explain how their assets are backed and managed, while custody providers must prove consumer assets’ security and accessibility. The FCA also aims to reduce risks tied to firm failures in the sector.
The Bank of England will oversee stablecoins operating at systemic scale, coordinating closely with the FCA. Sarah Breeden, the Bank’s deputy governor for financial stability, said a complementary consultation will be published later this year.
However, industry leaders warn regulatory uncertainty and delays risk pushing crypto innovation out of the UK. Executives from Coinbase and Ripple caution that unclear stablecoin frameworks and slow licensing are hampering new product launches and investment.
The FCA’s move follows rising concerns from the Financial Policy Committee about systemic risks linked to stablecoins and unbacked crypto assets. The final regulatory framework is expected in 2026.
