FCA Stablecoin Issuance and Cryptoasset Custody Regime

The 2026 Regulations create regulated activities for issuing a qualifying stablecoin and safeguarding qualifying cryptoassets. The issuance activity generally captures a person that offers a qualifying stablecoin from a UK establishment, is responsible for its creation, and undertakes both redemption and maintenance of its stable value. Safeguarding covers custody on behalf of another person, including control of the means of access such as private cryptographic keys. Firms carrying on these activities within the statutory perimeter will require FCA authorisation.

CP25/14 focuses on UK-issued, fiat-referenced qualifying stablecoins and custody of qualifying cryptoassets. Stablecoins issued outside the UK are not subject to the FCA’s proposed issuance rules merely because UK consumers can access them, although a firm safeguarding those assets in the UK or for UK consumers may fall within the custody perimeter. Self-custody wallet providers that do not safeguard assets for another person are outside this proposed custody activity.

The FCA proposes that qualifying stablecoins be fully backed at all times by assets equal to the value of coins minted. The proposed eligible pool centres on liquid assets, including on-demand deposits and short-dated government debt, with additional asset types permitted subject to liquidity and risk controls. Backing assets would be segregated from the issuer’s own property, held under a statutory trust for stablecoin holders, and placed with an independent third party outside the issuer’s group.

Issuers would have to offer redemption at par to all holders without a minimum redemption amount. A payment order would generally need to be placed by the end of the business day after a valid request, subject to specified exceptions. Redemption fees would need to reflect operational costs rather than pass through losses from selling backing assets. The FCA also proposes quarterly publication of the number of stablecoins and backing-asset composition, alongside clear information about technology, third parties and redemption. Issuers would remain responsible when third parties perform parts of the activity.

For custody, the FCA proposes a new CASS framework requiring firms to segregate client cryptoassets and hold them under a non-statutory trust. Custodians would maintain client-specific records capable of distinguishing each client’s holdings from those of other clients and the firm. They would perform a qualifying cryptoasset reconciliation each business day, address shortfalls, and notify the FCA where required.

Third-party custody arrangements would require due diligence, periodic review, governing-body approval and written terms dealing with services, liability, trust status and restrictions on set-off. Client disclosures would explain wallet structures and associated risks, with access to current account information or at least an annual statement contemplated. CP26/4 later proposed targeted adjustments for firms combining custody with other regulated cryptoasset services, including limited commingling and trust exceptions in specified circumstances; final treatment remains pending.

According to the FCA’s authorisation timetable, the application period is scheduled to run from 30 September 2026 to 28 February 2027. The 2026 Regulations brought preparatory powers into force in February 2026 so the FCA could make rules, issue guidance and process applications, but the substantive regime is scheduled for 25 October 2027. Until final rules are issued and the commencement date arrives, CP25/14 should be treated as a proposed framework rather than an operative stablecoin and custody rulebook.