Latest New FCA Crypto Custody Rules Would Force Firms to Upgrade Security in Cryptocurrency

Blockchain technology 2025-05-28T15:39:42.488+02:00 W e d n e s d a y , 2 8 / 0 5 / 2 0 2 5 | 1 3 : 3 9 G M T by Jared Kirui The regulator and the BoE will coordinate to ensure a consistent regulatory framework. The Bank of England also plans to publish its own consultation paper later in 2025, addressing issues like allowing returns on backing assets. FM, Financial Conduct Authority Regulators in the UK have taken a step closer toformal crypto oversight. The Financial Conduct Authority (FCA) has opened consultations on new rules governing stablecoins and the custody ofdigital assets. The proposals are part of an effort to establish asafer, more transparent environment for crypto services, while still enablinginnovation in the sector. A New Phase in Crypto Regulation The FCA’s latest move targets firms issuingstablecoins, crypto assets pegged to fiat currencies, and those safeguardingconsumer crypto assets. The proposed framework would require issuers tomaintain stable value through appropriate asset backing and ensure transparencyin how these assets are managed. Custodians would need to keep crypto assets secure andaccessible, minimizing the risks of customer loss or delayed access. According to the FCA, the proposals stem from monthsof consultation, roundtables, and feedback from earlier discussion papers. Theregulator emphasized the importance of building a system that fostersinnovation while maintaining integrity and trust in the market. You may also find interesting on financemagnates.com: MetaTrader Blocked in China? Users Unable to See FX/CFD Broker Servers “We welcome the proposals the FCA has published aspart of building the UK’s stablecoin regime. For those stablecoins that expectto operate at systemic scale, the Bank of England will publish a complementaryconsultation paper later this year, including responding to industry feedbackaround allowing some return on backing assets,” commented Sarah Breeden, deputygovernor for financial stability at the Bank of England. “We continue to work closely with the FCA to ensurethe integrity of the UK’s stablecoin regime, including how firms transitionwithin the regime.” Collaboration With the Bank of England The FCA’s approach is part of a broader regulatoryinitiative involving the Bank of England, which is preparing a parallelconsultation focused on stablecoins expected to reach systemic scale. The Bank of England will reportedly publish its own consultationlater this year, potentially addressing the industry’s calls to allow returnson the assets backing certain stablecoins. Stablecoins have the potential to make cross-border payments faster and cheaper by leveraging blockchain technology. Recognizingthis potential, the FCA plans to add stablecoins to its innovation services,potentially giving fintech firms new tools to explore compliant offeringswithin a supportive regulatory environment. The FCA’s consultation follows the UK Treasury’s draftlegislation issued in April 2025. Stakeholders can submit feedback on theproposals until 31 July 2025. The regulator plans to finalize and publish therules in 2026. As the UK builds out its stablecoin regime, thecurrent consultations mark a crucial point in setting the direction for cryptoasset firms operating in the country.  » …

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