UK FCA Seeks Public Input on Stablecoin and Crypto Custody Rules Amid Push for Clearer Crypto Regulation
The UK’s Financial Conduct Authority (FCA) has launched a public consultation on proposed regulations for stablecoins and cryptocurrency custody services, marking a significant step toward establishing clearer rules for digital assets. The announcement, made on May 28, is part of the UK’s broader strategy to bring structure and trust to a largely unregulated space.
The FCA said the proposals build on previous industry feedback and roundtable discussions, aiming to strike a balance between fostering innovation and ensuring consumer protection. David Geale, the FCA’s executive director of payments and digital finance, said the agency supports progress in the sector but remains focused on market integrity. According to Geale, the goal is to enable the crypto space to grow responsibly while providing clear standards that protect users and maintain confidence.
“At the FCA, we have long supported innovation that benefits consumers and markets. At present, crypto is largely unregulated in the UK. We want to strike a balance in support of a sector that enables innovation and is underpinned by market integrity and trust.”
Among the key measures is a requirement for stablecoin issuers to allow holders to redeem tokens at par value—regardless of market fluctuations in reserve assets—by the end of the following business day after a valid request. Issuers would also need to disclose how reserve assets are managed and ensure those reserves are held by independent third-party custodians. These steps are designed to ensure transparency, liquidity, and separation between client and company funds.
In addition to stablecoin regulation, the FCA is proposing new rules for firms that provide crypto custody services. These companies would be expected to ensure that customer assets are securely stored and easily accessible at any time. The proposed rules are meant to reduce the risk of asset loss or delays in access, while also minimizing the potential fallout if a firm were to fail.
The FCA’s efforts are part of a coordinated regulatory push in the UK, working alongside institutions such as the Bank of England. The central bank is expected to publish its own consultation later this year for stablecoins that could operate at a systemic scale. Bank of England Deputy Governor Sarah Breeden noted that these efforts are key to building a stable and trusted regulatory framework for digital assets.
“We propose to require issuers to provide holders with the right to redeem qualifying stablecoins at par value with the reference currency, irrespective of the value of the backing assets portfolio, with a payment order placed to an account in the name of the holder at the latest by the end of the business day following receipt of a valid request.“
The regulatory push follows recent comments by UK Chancellor of the Exchequer Rachel Reeves, who outlined plans for a comprehensive regime that positions the country as a leader in crypto and digital finance. As the landscape continues to evolve, both regulators and market participants are working to ensure that innovation and investor protection go hand in hand.