FCA consults on stablecoin issuance and custody of cryptoassets

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/14 (CP) on stablecoin issuance and cryptoasset custody, accompanied by an updated webpage. This follows the FCA's discussion paper published in November 2023, which outlines the proposed approach to regulating stablecoins. This new CP is part of the FCA's roadmap for crypto regulation and is intended to be read alongside CP25/15, which sets out the proposed prudential regime for cryptoasset firms (and which we discuss here). In CP25/14, the FCA has proposed rules and guidance for the issuance of qualifying stablecoins and the safeguarding of qualifying cryptoassets, including stablecoins. These activities are expected to become regulated activities under the HM Treasury's draft legislation, the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 subject to its finalisation.

The FCA has set out proposals under which qualifying stablecoin issuers will be required to:

• Back qualifying stablecoins with secure, liquid assets in a statutory trust for qualifying stablecoin holders (held with a third-party custodian who is not in the issuer's group so as to mitigate contagion risk).
• Offer redemption of qualifying stablecoins in exchange for money to all holders.
• Clearly disclose their policy for redemption and the composition of backing assets to consumers.

The FCA's proposals are aimed to enhance consumer and market confidence in qualifying stablecoins by ensuring they are fully backed on a 1:1 basis with secure, liquid assets.

The FCA has also proposed that custodians of qualifying cryptoassets will be required to:

• Segregate client cryptoassets from their own.
• Hold those qualifying cryptoassets on behalf of clients in a trust.
• Have accurate books and records of clients' cryptoassets holdings.
• Have adequate controls and governance to protect clients' cryptoassets holding.

The FCA will in future publications propose additional measures to protect qualifying cryptoassets, including prudential and operational resilience measures.

The deadline for comments to the CP is 31 July. The FCA also has plans to publish further consultations throughout 2025 and Q1 2026 and has included an outline of the planned FCA policy publications for cryptoassets and the content they are expected to cover.

Return to main website.