UK’s FCA Opens Public Consultation on Stablecoin and Crypto Custody Regulation
The UK is taking another step toward becoming a global crypto hub. On May 28, the Financial Conduct Authority (FCA), the country’s top financial regulator, launched a public consultation on new proposals for regulating stablecoins and crypto custody services.
A Major Milestone in the UK’s Crypto Roadmap
This move follows the UK Treasury’s draft legislation released in April 2025, and now the FCA wants input from crypto firms, legal experts, consumer groups, and the broader public. The consultation is open until July 31, 2025, with final regulations expected in 2026.
The FCA’s goal is to gather feedback that will shape how blockchain-based payment assets like stablecoins are managed, especially given their increasing role in financial settlements and transactions.
Why Stablecoin Regulation Matters
Stablecoins offer clear benefits—faster settlements, lower transaction fees, and improved efficiency—but the FCA stresses that transparency and trust must be a priority. Issuers will be expected to disclose how their stablecoins are backed, including clear information about reserve assets.
“Stablecoins could play a key role in the payments sector, but regulation is essential to maintain market integrity and consumer trust,” said David Geale, Executive Director for Payments and Digital Finance at the FCA.
A Joint Effort with the Bank of England
The Bank of England (BoE) is also involved in shaping this future. Sarah Breeden, the BoE’s Deputy Governor, commented on the importance of aligning frameworks for stablecoins expected to operate at systemic scale. She confirmed the BoE will publish a complementary consultation paper later this year, tackling concerns such as allowing returns on backing assets.
“We welcome the FCA’s proposals as part of building the UK’s stablecoin regime,” Breeden stated.
Who Should Participate in the Consultation?
The FCA is inviting responses from a wide range of stakeholders, including:
- Stablecoin issuers
- Crypto custody providers
- Payment platforms
- Industry legal groups
- Auditors and compliance professionals
- Consumer rights and advocacy organizations
By encouraging broad participation, the FCA aims to develop a balanced regulatory framework that supports innovation while safeguarding the integrity of financial markets.
Conclusion: The UK Doubles Down on Becoming a Crypto Innovation Hub
This consultation is a clear sign that the UK government remains committed to supporting crypto innovation while addressing the risks associated with digital finance. With stablecoins likely to become a major part of global payment infrastructure, clear rules are no longer optional—they’re essential.
As the July deadline approaches, industry players are urged to make their voices heard and help shape the future of crypto regulation in the UK.
