The UK FCA has introduced landmark crypto rules covering exchanges, stablecoins, staking and custody, setting a new licensing framework to strengthen innovation.
The UK has published its final stablecoin rules under the Financial Conduct Authority's (FCA) new crypto framework, easing several proposed requirements after industry feedback.
The framework aims to strengthen consumer protection while giving digital asset companies greater regulatory certainty as the country seeks to become a global crypto hub.
Under the new framework, crypto firms must obtain FCA authorization before operating in the UK. This rule applies to trading, custody, and staking services.
Historically, the FCA has approved less than 15% of all crypto-related applications submitted.
The regulator said companies must meet financial resilience standards, including capital requirements and stress testing, while complying with new rules designed to prevent insider trading and market manipulation.
The FCA said the framework is designed to provide regulatory certainty without restricting innovation. Until the new regime becomes mandatory on Oct. 25, 2027, the regulator will continue supervising firms mainly through financial promotions and anti-money laundering requirements
David Geale, executive director of payments and digital finance at the FCA, called the framework a significant moment for crypto regulation in the UK.
"We've created a framework that doesn't force firms to choose between regulatory certainty and room to innovate. This regime means they can have both in a stable, competitive home to build and grow."
A key part of the framework focuses on stablecoins, which are digital assets designed to maintain a fixed value by tracking currencies such as the British pound.
Following months of consultation, the FCA softened several proposals after receiving industry feedback.
It reduced the capital requirement for stablecoin issuers by lowering the K-SII capital coefficient from 2% to 1%. This step is likely so ease the entry barrier for mid-sized digital asset companies.
The regulator removed redemption forecasting requirements for backing assets. It also permitted limited intragroup custody with safeguards and allowed a 5% reserve pool excess.
According to the FCA, these changes make the framework more practical while preserving financial stability and consumer protection.
The FCA is encouraging firms to begin preparations well before the rules become mandatory. Pre-application support meetings will begin in July, while firms can submit authorization applications between Sept. 30, 2026, and Feb. 28, 2027.
Existing registrations under the UK's Money Laundering Regulations will not automatically transfer to the new regime, meaning businesses carrying out regulated crypto activities must secure fresh FCA authorization.
The regulator said the early application period is designed to help firms transition smoothly before the full framework takes effect in October 2027.
The FCA's announcement follows recent adjustments by the Bank of England, which also eased parts of its proposed stablecoin framework after receiving feedback from crypto firms and financial institutions.
The central bank reduced the mandatory cash reserve requirement to 30%. Issuers can invest up to 70% of backing assets in short-term UK Treasury bills.
Allowing 70% allocation into treasury bills will enable stablecoin issuers to capture more yield on backing assets.
It also removed proposed holding limits and introduced a temporary £40 billion issuance cap, changes intended to improve the commercial viability of stablecoin businesses while maintaining safeguards.
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