The U.K.’s Financial Conduct Authority (FCA) is undertaking consultations on proposed prudential rules for crypto firms, along with proposals for regulating the issuance of stablecoins.
The regulator published a pair of consultation papers as part of its efforts to craft an overarching regulatory framework for the fledgling crypto sector. Currently, the FCA is limited to ensuring compliance with anti-money laundering requirements and certain consumer protection rules.
In 2023, the U.K. government signalled its intention to adopt a more comprehensive regulatory regime for cryptoassets, which led to the publication of discussion papers by the FCA on a proposed approach to regulation for the sector. Now, in the wake of those consultations, it’s inviting feedback on proposed prudential rules and guidance on issuing regulated stablecoins and safeguarding cryptoassets.
“Clear prudential rules and expectations will reduce regulatory uncertainty, encouraging firms to set up in the U.K. to offer cryptoasset services. And prudential stability will give both firms and consumers greater confidence to do business,” the paper said.
The FCA said its proposals would require firms providing crypto custody services to ensure that they are “effectively secured and can be easily accessed. … The proposals also seek to reduce the likelihood and impact of firm failures across regulated firms undertaking the activities of stablecoin issuance and cryptoasset custody.”
A future consultation will also consider applying prudential rules to firms safeguarding regulated cryptoassets while offering services such as operating a trading venue or engaging in crypto staking.
“We want to strike a balance in support of a sector that enables innovation and is underpinned by market integrity and trust,” said David Geale, executive director for payments and digital finance at the FCA, in a release.
Sarah Breeden, deputy governor for financial stability at the Bank of England, said the central bank will also issue its own consultation paper later this year for “stablecoins that expect to operate at systemic scale,” including an approach to allowing some return on the assets backing stablecoins.
“We continue to work closely with the FCA to ensure the integrity of the U.K.’s stablecoin regime, including how firms transition within the regime,” she added.
The deadline for responding to the consultations is July 31. The FCA is planning to publish final rules in 2026.