UK Crypto Rules: New Plans for Stablecoins and Custody

The UK’s financial watchdog is shaping fresh rules for companies that create stablecoins and hold digital assets. A draft package, opened to comment in May 2025, will guide firms that offer or keep “qualifying” crypto products. The final guidance is still pending, with a policy statement expected later this summer and full regulations set for October 2027. The upcoming rules focus on two main activities. First, a firm that issues a stablecoin must keep it fully backed by liquid assets—like on‑demand deposits or short‑term government debt—at all times. The backing must be kept separate from the issuer’s own money, stored with a trusted third party, and available for holders to redeem at face value without a minimum amount. Issuers will also have to publish quarterly data on how many coins are in circulation and what assets back them.

Second, for custody, a new framework will require companies to hold clients’ crypto in segregated accounts under a trust. Custodians must keep detailed, client‑specific records and reconcile holdings daily. If there are any shortfalls they need to correct them immediately and report to the regulator. Any third‑party arrangements must be carefully vetted, reviewed regularly, and written up with clear limits on liability and set‑off rights. The rules apply only to UK‑issued, fiat‑referenced stablecoins and to custody of crypto for UK customers. Assets issued abroad are exempt unless a firm in the UK holds them on behalf of another person, while self‑custody wallets that don’t hold others’ assets fall outside the scope. The FCA plans to publish its feedback on the proposals in summer 2026. Once the regulations take effect next year, firms will need to secure authorisation and comply with the new rules. These steps aim to protect consumers, improve transparency, and strengthen oversight of digital‑asset services in the UK.

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