On 28 May 2025, hot off the heals of the government's draft crypto legislation, the FCA published two significant consultation papers on the UK's regulatory regime for cryptoassets. The papers, which should be read together, cover proposed rules and guidance for firms carrying on the new regulated activities of issuing qualifying stablecoins and safeguarding qualifying cryptoassets.
Stablecoin issuance and crypto custody
CP25/14 contains proposed requirements that are designed to ensure:
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issuers of qualifying stablecoins have the right resources, processes and controls in place to promote the stability, transparency, and reliability of qualifying stablecoins
The FCA proposes to include the new requirements in the FCA's Client Assets sourcebook (CASS) and a new crypto sourcebook (CRYPTO).
Under the proposals, qualifying stablecoin issuers will be required to:
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hold backing assets (in the form of money or other highly liquid assets) with an unconnected third party custodian. The assets will be protected under a statutory trust of which the issuer is trustee
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redeem qualifying stablecoins of any amount by placing a payment order for redeemed funds within one business day of receiving a valid redemption request
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disclose clearly their redemption policy and the composition of backing assets to consumers.
Qualifying cryptoasset custodians will be required to:
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segregate client cryptoassets from their own
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hold qualifying cryptoassets on behalf of clients in a trust, which the FCA proposes is a non-statutory trust
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maintain accurate books and records of clients' cryptoassets holdings
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have adequate organisational arrangements and governance.
Future policy papers will propose additional protections for qualifying cryptoassets, including prudential and operational resilience requirements.
Financial resilience
CP25/15 sets out the FCA's proposed prudential rules and guidance for qualifying stablecoin issuers and qualifying cryptoasset custodians.
The FCA has used this consultation paper to provide an update on its overall approach to prudential regulation and has confirmed that it will be creating a new sourcebook, the Core Prudential sourcebook (COREPRU), which will bring together core prudential requirements common across the different categories of firms that the FCA regulates for prudential purposes. COREPRU will house some elements of the crypto prudential regime and will, in time, contain core prudential provisions for all regulated firms.
The FCA is introducing a new crypto prudential sourcebook, CRYPTOPRU, for firms carrying on regulated cryptoasset activities.
CP25/15 does not cover all aspects of the prudential regime for firms carrying on regulated cryptoassets activities but addresses the following topics:
COREPRU
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overall financial adequacy
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definition of own funds
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own funds requirements (overall calculation)
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fixed overhead requirement
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concentration risk monitoring
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basic liquid asset requirement.
CRYPTOPRU
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permanent minimum requirement for qualifying stablecoin issuers and qualifying cryptoasset custodians
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K-factor requirement for qualifying stablecoin issuers and qualifying cryptoassets custodians
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issuer liquid asset management.
The following topics will be covered in a future consultation, expected to be published in Q4 2025/Q1 2026 (CP2):
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requirements for cryptoassets firm groups
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permanent minimum requirement for activities not covered in CP25/15
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K-factor requirement for activities not covered in CP25/15
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sector-specific concentration risk requirements
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internal capital adequacy and risk assessment
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public disclosure of prudential information.
The FCA notes that there will be instances in which CRYPTOPRU firms are subject to other prudential requirements. The CP proposes how this interaction is dealt with for determining the own funds requirement of stablecoin issuers/crypto custodians which are also MiFID investment firms and will consult more widely on the interaction of requirements in different prudential sourcebook interactions with its requirements for cryptoassets firms in CP2.
Next steps
The deadline for comments on the consultation papers is 31 July 2025. The FCA expects to set out its final rules and guidance in one (or more) policy statement(s) in 2026 before the new regime goes live.
The Bank of England will publish a separate consultation paper later this year for those stablecoins that are expected to operate at systemic scale and is working with the FCA to ensure the integrity of the UK's stablecoin regime.
Help is at hand
If you have any questions about the proposed regulatory regime for stablecoins, please let us know.
