Are you ready for the FCA's proposed Stablecoin & Crypto Custody rules?
The FCA published Consultation Paper CP25/14, proposing a new regulatory framework aimed at enhancing consumer protection and regulatory oversight in the UK crypto-asset sector
1 July 2025 | Author: Artur Vorobyev
Artur Vorobyev examines the FCA’s proposed rules for stablecoins and crypto custody
Why is it relevant?
FCA Consultation Paper (CP 24/20): Strengthening the Safeguarding Regime
On 28 May 2025, the FCA published Consultation Paper CP25/14, proposing a new regulatory framework that introduces strict new requirements aimed at enhancing consumer protection and regulatory oversight in the UK crypto-asset sector.
Who does it affect?
This will have significant implications for issuers, custodians, and payment arrangers in the crypto-asset sector.
What do you need to know?
Following the release of CP25/14, there are a number of key highlights to consider:
Stablecoin Issuance Requirements:
- 1:1 full backing of issued coins with high-quality liquid assets (short-term government debt and deposits only)
- Daily redemption rights at par value
- Ringfenced reserves held in statutory trust for coin holders
Crypto asset Custody Requirements:
- FCA proposes to apply CASS-style protections to crypto custody
- Segregation of client assets, accurate recordkeeping, reconciliations, and robust governance are key pillars
- On-chain records may be recognized as definitive ownership
Strong Consumer Duty Obligations:
- Issuers and custodians must demonstrate that products are safe, transparent, and designed in the best interests of retail consumers
- Full disclosure required on redemption, backing assets, custodians, and risks
Regulation of Payment Arrangers:
- Entities arranging or initiating payments with stablecoins will be brought into the Payment Services Regulations — addressing a major regulatory gap
What About CASS 16 and 17?
While CP25/14 does not yet confirm the creation of new CASS chapters, the FCA clearly signals its intention to implement a bespoke CASS-like regime for crypto custody. This may eventually result in the formal introduction of CASS 16/17, specifically tailored to crypto assets and stablecoin safeguarding.
What should you do next?
The consultation is open until 31 July 2025, with final rules expected in 2026. Now is the time to:
- Review your current stablecoin issuance model or custody services
- Assess readiness to comply with CASS-style safeguarding
- Provide input to the FCA if you wish to shape the future framework
Contact us
For further information and to find out how we can assist you with these changes, please get in touch with your usual Blick Rothenberg contact or Richard Hinton using the form below.
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