On 28 May 2025, the Financial Conduct Authority (FCA) published two further consultation papers (CPs) on cryptoasset regulation – CP25/14 on stablecoin issuance and cryptoasset custody and CP25/15 on a proposed prudential regime for cryptoasset firms.

Background

The Government plans to create a UK financial services regulatory regime for cryptoassets, including stablecoins, and HM Treasury (HMT) published draft legislation on 30 April 2025.

The FCA will be the regulator for the new regime and it has been engaging with the industry on what that regime may look like, including publishing a discussion paper (DP23/4) on its proposed approach to regulating stablecoins in November 2023. The latest proposals are the result of that engagement.

CP25/14: Stablecoin issuance and cryptoasset custody

In CP25/14, the FCA sets out its proposed rules and guidance for the activities of issuing a qualifying stablecoin and safeguarding qualifying cryptoassets (including qualifying stablecoins), which will be introduced as specified activities through amendments to the Regulated Activities Order (RAO) that are made by the recently published draft legislation. The FCA explains that its proposals are based on the activities as set out in the draft legislation and will be subject to that legislation being finalised.

HMT has previously confirmed that it does not intend to bring stablecoins into UK payments regulation at this time, and the CP therefore does not include proposed requirements for firms carrying out payments using qualifying stablecoins.

Under the proposals, 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).
  • 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 is also proposing to require custodians of qualifying cryptoassets to:

  • Segregate client cryptoassets from their own.
  • Hold them on behalf of clients in a trust.
  • Keep accurate books and records of clients’ cryptoassets holdings.
  • Have adequate controls and governance to protect clients’ cryptoassets holdings.

CP25/15: A prudential regime for cryptoasset firms

In CP25/15, the FCA proposes prudential rules and guidance for issuing qualifying stablecoins and the safeguarding of qualifying cryptoassets. Parts of the proposed prudential regime will be placed in the FCA’s integrated prudential sourcebook, known as COREPRU. The FCA also proposes to set out the sector specific requirements for firms doing regulated cryptoasset activities in a new sourcebook known as CRYPTOPRU, and these firms will be referred to as CRYPTOPRU firms.

CP25/15 focuses only on certain aspects of the prudential regime for CRYPTOPRU firms, and the FCA sets out in a table at paragraph 2.6 of the CP the areas that will be covered in future consultations.

The areas covered by the proposals are:

  • The definition and composition of capital for own funds purposes – including the definition and ‘tiers’ of capital that are eligible as regulatory capital, prior permissions that are required from the FCA to count certain items as regulatory capital and to reduce regulatory capital, and the minimum proportions in which own funds must be held.
  • Own funds requirements – including adding an own funds requirement, a permanent minimum capital requirement for issuers of qualifying stablecoin and for qualifying cryptoasset custodians, a cross-sector fixed overheads requirements, and a ‘K-factor’ requirement.
  • Liquid assets requirements – the FCA sets out the proposed minimum liquidity requirements for CRYPTOPRU firms and the type of assets the firm can hold to meet them.
  • Concentration risk – the FCA explains its proposals for monitoring requirements to address concentration risk, which will apply to all CRYPTOPRU firms.

Next steps

Both consultations close on 31 July 2025.

The FCA notes that the two CPs should be read together and will be followed by further papers as part of its cryptoasset roadmap. It plans to consider responses to both CPs and to set out final rules and guidance in policy statement(s) ahead of implementation.