UK’s Financial Conduct Authority (FCA) published its final crypto regulatory framework, easing capital and disclosure requirements after industry complaints that initial proposals were too onerous. The regulator reduced stablecoin capital requirements from 2 percent to 1 percent of issued stablecoin value and gave firms more time to process redemptions. The rules take effect in October 2027.
What the new crypto rules require
The FCA’s final crypto rules bring firms (exchanges, custodians, and stablecoin issuers) under a comprehensive regulatory framework for the first time. Now, companies must meet capital requirements, conduct annual stress tests, and prove they can weather market shocks.
David Geale, the FCA’s point person for payments and digital finance, explained: “For the first time, we’ve got a comprehensive regulatory framework for crypto in the UK, one that covers how firms trade, how they hold assets, serve consumers and manage risk.” But unlike UK banks (which are given specific scenarios by the Bank of England), crypto companies will just handle their own stress tests using their internal risk checks and send those reports to the FCA once a year.
Changes to capital requirements and disclosures
The FCA reduced stablecoin capital requirements from 2 percent to 1 percent after industry pushback, with officials acknowledging the initial proposal was too high. “The feedback we got (was) that we’re starting a bit high,” Geale said.
The UK regulator also backed off on a few other proposals. They are now giving companies more breathing room to pay back customers who want to cash out their stablecoins, and they have cut down on some of the paperwork that had to be made public. Most stablecoins will just answer to the FCA, but the ones that are considered “systemic” (with the potential to be widely used for payments) will have to follow much stricter rules set by the Bank of England.
Keep in mind, though, that these crypto rules only apply to stablecoins tied to the British pound, which is actually a pretty tiny slice of the global market.
The balancing act: Protection versus competitiveness
The UK’s approach reflects a broader tension facing regulators worldwide: how to protect consumers while remaining competitive in a global market. The FCA’s Geale framed the rules as a foundation for growth: “This is really about giving crypto a solid foundation from which to build. Firms have been asking us for regulatory clarity and we think we’ve delivered it.”
On the other side of the Atlantic, the U.S., under President Trump, has pursued crypto-friendly policies, creating competitive pressure on other jurisdictions. However, the FCA’s lower capital requirement may still be too high for some issuers.
Benoit Marzouk, CEO of BCP Technologies, noted that even the 1 percent requirement remains challenging, with U.S. rules likely to adopt a flat capital requirement.
