UK Unveils Crypto Regulation Plan: FCA and Bank of England Target Stablecoins and Custody

WikiFX

| 2025-05-29 17:05

Abstract：The UK’s FCA and Bank of England have unveiled a joint regulatory plan for stablecoins and crypto custody, aiming to ensure asset security, market trust, and innovation through clear standards and consumer safeguards.

In a major move toward establishing a comprehensive regulatory framework for digital assets, the UK Financial Conduct Authority (FCA) has released a detailed proposal addressing the issuance of stablecoins and the safeguarding of cryptoassets. The plan, developed in collaboration with the Bank of England, represents the countrys most significant step yet in regulating the fast-evolving crypto sector.

Stablecoins—cryptocurrencies pegged to traditional fiat currencies—are seen as a potential bridge between decentralized innovation and traditional financial systems, especially in areas like cross-border payments.

The FCAs new proposals require stablecoin issuers to maintain strong asset backing, clear disclosures on reserve holdings, and robust governance systems. These measures aim to ensure both stability and transparency for users.

On the custody side, the FCA is introducing standards to protect consumer assets from mismanagement or loss. Crypto custodians will be expected to ensure that assets remain secure, accessible, and segregated from company funds, with new expectations around governance, operational resilience, and capital buffers.

The Bank of England, for its part, will oversee stablecoin arrangements that may reach systemic importance. A separate consultation paper, expected later this year, will explore regulatory models for large-scale stablecoins, potentially including provisions for offering returns on reserve assets.

These developments follow legislative groundwork laid by HM Treasury in April 2025 and result from months of industry consultation. The public consultation period runs until July 31, 2025, with final regulations expected to be introduced in 2026.

As the UK positions itself as a global leader in digital finance, this dual-agency framework marks a critical shift from voluntary standards to enforceable rules. It signals to crypto firms and investors alike that clearer guidelines—and greater accountability—are coming soon.