The UK’s Financial Conduct Authority (FCA) has unveiled a new set of proposals designed to enhance the financial resilience of cryptoasset firms, with a strong emphasis on regulating stablecoins. The move is part of the broader effort to bring the UK’s crypto sector into a formal regulatory framework and marks a significant milestone in the government’s approach to digital assets.
The FCA’s proposals aim to ensure that regulated stablecoins maintain consistent value and are supported by well-managed backing assets. Firms offering these coins will be required to provide transparent, consumer-friendly information on how their reserves are handled. The FCA also intends to enforce strict standards for crypto custody providers, ensuring customer assets are securely held and always accessible.
David Geale, the FCA’s executive director for payments and digital finance, stated that the regulator seeks to balance innovation with trust and market integrity. “Crypto is largely unregulated in the UK today,” he said. “We want to support a sector that enables innovation while being safe and transparent for consumers.”
The Bank of England will collaborate closely with the FCA to build a robust regulatory regime for stablecoins. Deputy governor Sarah Breeden confirmed that the central bank will issue its own consultation paper later this year, focusing on systemic stablecoin operators and exploring the possibility of allowing them to earn returns on their backing assets.
Recent research from the Bank for International Settlements underlines the growing significance of stablecoins in global financial markets. The study found that stablecoin flows can influence U.S. Treasury yields, particularly short-term ones, with Tether (USDT) and Circle (USDC) having the largest impact. These findings highlight how stablecoins are increasingly intertwining with traditional finance, raising important considerations for monetary policy and market stability.
The FCA’s proposals align with the UK government’s legislative efforts, published in April, to formally bring crypto firms under regulatory oversight. The joint work between the FCA and the Bank of England reflects the seriousness with which UK authorities are treating the sector’s integration with mainstream finance.