FCA Consults on Proposals for Stablecoin Issuance and Cryptoasset Custody

The UK Financial Conduct Authority (the FCA) recently published two consultations: CP25/14 on stablecoin issuance and cryptoasset custody (CP25/14), and CP25/15 on prudential requirements for cryptoasset firms (CP25/15, and together with CP25/14, the Consultations). 

The Consultations are the latest milestone in the FCA’s roadmap for cryptoasset regulation. They build on HM Treasury’s draft legislation published in April 2025, which will bring certain cryptoasset-related activities within the UK regulatory perimeter. Further details on the draft legislation can be found in our previous update (available here).

Scope of the Consultations

The Consultations focus on “qualifying” stablecoins (i.e., cryptoassets that aim to maintain a stable value by referencing at least 1 fiat currency) and related activities. Issuing such stablecoins and custody of qualifying cryptoassets will become regulated activities requiring FCA authorisation when conducted by way of business in the UK.

CP 25/14 

In CP 25/14, the FCA seeks views on its proposed rules and guidance for the activities of issuing a qualifying stablecoin and safeguarding qualifying cryptoassets. The proposals aim to ensure regulated stablecoins maintain their value and require customers to be provided with clear information on how the assets backing an issuance of qualifying stablecoins are managed. 

Among other things, CP25/14 covers the following proposals:

• Authorisation. Firms carrying out the new regulated activities must be authorised under Part 4A of the Financial Services and Markets Act 2000;
• Full Reserve Backing. Stablecoin issuers must fully back their tokens with high-quality, low risk, liquid assets equal in value to all outstanding stablecoins. These backing assets must be held in a statutory trust and managed by a separate, independent custodian. Reserves are limited to low-risk instruments with only limited use of longer-term public debt or certain money-market funds; 
• Redemption rights and transparency obligation. Stablecoin holders must have the legal right to redeem qualifying stablecoins at par value on demand directly. The payment order of redeemed funds must be placed by the end of the business day following receipt of a valid redemption request; and
• No interest to holders. Firms cannot pass through to stablecoin holders any interest earned on the reserve assets. 

CP 25/15

In CP 25/15, the FCA seeks views on its proposed prudential rules and guidance for firms issuing qualifying stablecoins and safeguarding qualifying cryptoassets, including financial resource requirements. 

Parts of the proposed prudential regime will be placed in a new proposed integrated prudential sourcebook (COREPRU), while sector-specific prudential requirements for firms undertaking regulated cryptoassets activities will be set out in a new CRYPTOPRU sourcebook.  

Notably, the key proposals in CP 25/15 cover the following areas: 

• Capital requirements. The FCA proposes a minimum own-funds requirement for so-called “CRYPTOPRU Firms” that will require them to hold as own funds the higher of:
  • a permanent minimum requirement (i.e., £350,000 for issuing qualifying stablecoins or £150,000 for safeguarding of qualifying cryptoassets); 
  • a fixed overhead requirement based on annual expenditure; or
  • a variable activity-based “K-factor” requirement.
• Liquidity requirements. Firms must hold a minimum amount of liquid assets. There will be a basic liquid assets requirement for all CRYPTOPRU firms, and an issuer liquid asset requirement for those that issue qualifying stablecoins. 
• Concentration risk. Firms will be required to monitor and control for concentration risk, to ensure that they are not overly exposed to one or more counterparties or asset types.

Next Steps 

The Consultations close on 31 July 2025. The FCA will consider any feedback before publishing its final rules, which are expected in 2026. 

CP 25/14 and CP25/15 are available here and here, respectively. 

Leander Rodricks, trainee in the Financial Markets and Funds practice, contributed to this article.