The UK Financial Conduct Authority has opened a consultation on the rules that will govern stablecoin issuance and custody once UK stablecoin regulation comes into force, with a published paper setting out proposed requirements on authorisation, capital, reserve composition, and redemption.

The paper is part of the ongoing implementation of the UK’s broader cryptoasset regulatory perimeter, which HM Treasury has indicated will treat fiat-referenced stablecoins as a distinct regulated activity rather than folding them into existing electronic-money or payment-services regimes.

What the FCA is proposing

According to the consultation paper, the FCA’s proposed rules cover, among other items:

  • Authorisation. Any firm issuing a fiat-referenced stablecoin to UK consumers, or distributing one in the UK, would be required to obtain FCA authorisation.
  • Backing. Issuers would be required to maintain reserves on a 1:1 basis with the value of stablecoins in circulation, held in high-quality liquid assets.
  • Custody. Reserves would need to be held with authorised custodians and segregated from issuer balance-sheet assets.
  • Redemption. Holders would have a right of redemption at par against the issuer, with prescribed maximum response times.
  • Operational resilience. Standard FCA expectations around incident reporting, business continuity, and cyber controls would apply.

What is not yet settled

Several questions remain open in the consultation, including the treatment of overseas-issued stablecoins distributed via UK exchanges, the interaction with the EU’s MiCA regime for issuers operating across both jurisdictions, and whether algorithmic stablecoins are covered by the perimeter at all.

The consultation also seeks views on disclosure requirements — specifically, what issuers must publish about reserve composition and how often.

Timeline

The consultation closes later in the summer, with final rules expected before year-end and a transition period for existing issuers and distributors. The FCA has not committed to a specific implementation date for new entrants but has indicated a phased approach.

We will follow up with the consultation response analysis once the comment period closes.

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