FCA issues UK crypto reforms – industry reaction

UK firms supporting people to buy, trade and hold crypto must now meet clear standards under landmark rules set out by the FCA.

All firms must meet financial resilience requirements including capital and stress testing. The FCA is also introducing new market integrity rules covering areas such as insider trading and market manipulation.  

The new framework also sets out specific rules for stablecoins, a type of cryptoasset designed to maintain a stable value, typically by being linked to a currency such as the pound. Stablecoins will be subject to clear, strong and transparent standards, helping to build trust in how they are used over time.  

Following consultation, the FCA has simplified key elements of the regime to make it more workable in practice including simpler capital requirements for stablecoin firms and tailoring trading rules to better reflect how crypto markets operate. 

The FCA drew upon international best practice, applying established financial services standards where risks are comparable, including the Consumer Duty.

Industry reaction broadly positive

Deep Patel, Partner & UK Payments Lead at Capco

The FCA’s crypto rules are a significant step towards bringing digital assets into the mainstream UK regulatory framework. Following last week’s Bank of England policy statement and Code of Practice on stablecoins, we are seeing clear moves to lay the foundations for a more integrated UK digital assets and payments ecosystem. The FCA and BoE are signalling that they want innovation, but only where cryptoassets and stablecoins are supported by proper safeguards and can operate with the level of trust expected of money.

The future of payments will involve different forms of money sitting alongside each other – including bank deposits, tokenised deposits, regulated stablecoins and potentially a digital pound – with stablecoins increasingly being seen as a potential payments infrastructure.

For payment firms, this creates opportunities around faster settlement, cross-border payments and programmable payments. For banks, it opens up new opportunities in custody, safeguarding, liquidity and settlement services, while also increasing pressure to develop tokenised deposit propositions of their own.

However, firms will need to meet high standards on backing assets, safeguarding, redemption and operational resilience, while proving they can support reliable redemption at face value, including under stress, alongside managing AML/KYC, liquidity, reconciliation, payment cut-offs and third-party dependencies.

These developments are a constructive step, giving sterling stablecoins and crypto a credible route into the UK payments ecosystem, but only for firms who are able operate with bank-grade controls.

Hugo Remi, CEO, Cardaq

The publication of the FCA’s framework is only the first step. What matters now is how firms respond. If businesses see the proposals as improving the clarity of crypto regulations, the UK stands to benefit. But if compliance costs increase disproportionately as a result, firms will inevitably look elsewhere to scale. Businesses don’t expect regulators to be absent. But they need certainty. The clearer the rules, the greater the confidence businesses have to invest.

Chris Kronenthal, President, FreedomPay

The industry’s conversation about ‘disruption’ is often too narrowly focused on the visible point of sale. A far greater source of financial friction is the chronic, slow-motion outage of antiquated backend systems, like cross-border settlement. The real potential of emerging technologies like stablecoins isn’t just novelty; it’s the opportunity to overhaul these decades-old infrastructures, making global commerce more transparent, efficient, and reliable.

Raagulan Pathy, CEO, KAST

The UK has a long history of setting the tone for financial regulation around the world, so it’s positive to see the FCA take this step on crypto rules. Clarity from regulators ultimately gives builders the stability they need to innovate. Alongside the GENIUS and CLARITY acts in the US, global regulators are engaging on the future of financial services, one where stablecoins will play a vital role.

Stablecoins are already solving real problems for people, but for that potential to scale in the UK, users need to know that the firms holding, moving and safeguarding their money are transparent and accountable. This framework will help create that foundation and strengthen the UK’s credibility as a home for the next generation of financial services.

Stablecoin finance will be defined by businesses that can combine useful technology, strong compliance and a genuine focus on user trust. That is how the sector moves from early adoption to becoming part of everyday financial life for people around the world.

John Higgins, CEO, Pathlight Associates

The softening of crypto and stablecoin rules reflects a pragmatic regulatory response to consultation feedback, with the aim to make the UK’s digital finance market more attractive and competitive in an increasingly crowded global market. The decision to lower a number of regulatory requirements will help position the UK as a market for crypto innovation and growth. In particular, the reduction of the additional capital requirement is a welcome competitive boost.

The authorisation pathway for crypto is already open, with pre-application support service (PASS) requests being accepted, and initial PASS meetings due to be arranged commencing in July. The application gateway itself is due to open this autumn. Firms targeting early applications need to move fast and get onto the PASS track for the best chance of success.

The wider crypto regime set for 2027 will enhance regulatory certainty, particularly around ‘temporary’ issuance caps and wholesale settlement. It will be critical to providing the optimal environment for scale-up firms to grow and compete with traditional banking institutions.

Michael McCormick, financial services managing consultant, RSM UK

The FCA has held the line on the core regulatory framework but made sensible concessions where the consultation risked being too rigid. The final rules are still demanding, particularly on safeguarding, disclosures, market abuse and Consumer Duty, but they are more operationally realistic. For crypto firms, this is no longer a question of watching the regime develop, the authorisation race has effectively started.

The comparison with MiCA (Markets in Crypto-Assets Regulation) is important. Europe has moved first and given firms a live, harmonised framework. The UK has moved later, but the FCA appears to have used that time to refine the regime in a way that better reflects how crypto markets actually operate. The UK will not win by being less rigorous than MiCA; it will win only if it can be more proportionate, more predictable and faster to supervise.

Renuka Rawlins, Director of Policy and Government Relations, for The Payments Association

It’s encouraging to see the Financial Conduct Authority’s updated rules for cryptoassets and stablecoins, and that the regulator has actively listened to our members’ feedback, introducing much-needed adjustments that replace rigid complexity with commercial workability. 

Most significant is the decision to halve the coefficient of the stablecoin issuance capital requirement from 2 per cent to 1 per cent. The Payments Association has consistently cautioned against importing overly conservative prudential frameworks that could stifle growth. This calibrated K-factor represents a major victory for proportionality, ensuring robust risk management without placing an unworkable capital burden on larger issuers.

The wider amendments to the stablecoin regime show a deeply welcome commitment to practical operations. Key refinements demonstrate a regulatory approach tailored to how real-world crypto markets function. These include adjusting redemption timelines to ensure operational effectiveness, removing the need to estimate complex redemption forecasts and permitting up to a 5 per cent excess to be held within the backing asset pool. Prohibiting unallocated backing fund accounts while confirming statutory trust arrangements also injects vital legal clarity for safeguarding.

By choosing flexibility and innovation alongside consumer protection, the FCA has ensured that firms do not have to choose between regulatory certainty and the freedom to scale. This balanced regime lays a strong baseline for the future evolution of payment stablecoins, helping to firmly cement the UK as a competitive, global hub for digital assets.

Hannah Meakin, partner, Norton Rose Fulbright

This is a significant step in bringing crypto into a more established regulatory framework in the UK. By applying familiar financial services standards – including around consumer protection, governance and market integrity – the FCA is aiming to address a number of key risks that may have held back wider adoption.
At the same time, the regulator has clearly sought to reflect how crypto markets operate in practice, with more tailored requirements in areas such as trading and stablecoins. For firms, the focus will now be on preparing for authorisation and ensuring they have the necessary systems, controls and organisational arrangements in place well ahead of implementation.