FCA finalises UK crypto rules for firms & stablecoins

The Financial Conduct Authority has published its final rules for the UK's crypto sector, creating a dedicated regime for firms operating with cryptoassets in Britain.

The framework covers trading venues, intermediaries, custodians, stablecoin issuers and firms that arrange staking. Any company that wants to serve UK customers must now obtain FCA authorisation.

The regulator has also eased some of its original proposals on capital requirements for stablecoin issuers after a lengthy consultation with domestic and international firms.

Under the final rules, non-UK stablecoins can circulate in the UK if they meet FCA standards. The regulator also confirmed plans to consult on Decentralised Finance (DeFi) and on financial crime guidance for cryptoasset firms.

Industry reaction has centred on the balance between tighter oversight and the UK's ambition to attract digital asset business. Commentators welcomed the added clarity but warned that unresolved issues around DeFi could still push activity offshore.

"The publication of the FCA's final crypto rules is a major milestone for regulatory clarity and a strong outcome for the UK's competitiveness in digital asset innovation. Critically, the UK's final rules preserve access to global liquidity and the benefits this brings for consumers (via an innovative licensing structure and flexibility for global custody models), as well as the ability of non-UK issued stablecoins to circulate within the UK, ensuring consumers have access to the most liquid global stablecoins.

Two issues remain. First, while the FCA has made welcome changes to its prudential framework, it is an open question as to whether these changes have gone far enough to ensure the cost of doing business in the UK is not materially higher vis-a-vis other jurisdictions. Second, the UK's future approach to DeFi will be critical: earlier proposals amounted to a de facto ban on centralised platforms providing access to DeFi applications, which would put the UK at odds with jurisdictions such as the US that are increasingly embracing DeFi to support their tokenisation ambitions," said Katie Harries, Head of Policy, Europe, Coinbase.

Many larger platforms had already been preparing for an authorisation regime. Compliance teams at payments and trading firms have been expanding in anticipation of tighter scrutiny of consumer protection, financial crime and market abuse.

"Forward-thinking crypto exchanges and their payments partners have been operating on the assumption that this regulation was coming. Those that have already embedded strong compliance practices should be well placed for authorisation, provided the regulatory approach supports innovation without adding unnecessary operational friction. The crypto firms that will succeed in the UK market are those that treat compliance as a strategic capability, enabling them to scale confidently as regulatory expectations evolve.

It is encouraging that regulatory barriers to sterling-denominated stablecoins have been lowered. Stablecoin payments will, in time, be commonplace alongside existing treasury, compliance, and payment workflows. However, regulation is only part of the story. To support mainstream adoption, businesses will need regulated payment partners that can manage the operational complexity of introducing a new payment method. As with any payment innovation, success depends on balancing trust and security with simplicity," said Matthijs Boon, Chief Partnership Officer, Equals.

Lawyers and DeFi developers described the FCA's shift on stablecoin capital as significant. They also pointed to ongoing consultations that will shape the scope of cryptoasset market abuse rules and the treatment of DeFi interfaces.

"The FCA softening stablecoin capital requirements in its final crypto rulebook is welcome news.

"For DeFi, the future is yet uncertain as a few consultations need to move to confirmed rules: CP26/13, which contains the FCA's proposed cryptoasset perimeter (PERG) guidance (consultation closed); and CP26/19, which proposes updates to the Decision Procedure and Penalties Manual (DEPP) to extend the FCA's penalty framework to the cryptoasset market abuse regime (closing on 10 August 2026).

"The FCA has also confirmed that it will consult in late 2026 on Decentralised Finance (DeFi) guidance as well as on updates to the Financial Crime Guide relevant to cryptoasset firms.

"The outcome of the rules here is critical as the FCA's current proposal in these consultations is to potentially require DeFi/bridge frontend providers to: (1) obtain FCA authorisation, (2) provide bank level disclosure, (3) get all promotions approved, (4) KYC all users, (4) SAR / DAML filings to the NCA, among other things.

As with the softening the stablecoin requirements, we hope the FCA reverses course and won't effectively ban DeFi in the UK, as this will likely lead to: (1) UK losing tax revenue as companies may move offshore, (2) existing DeFi frontends will geo-block UK persons and cut-off UK nationals from DeFi, and (3) potentially push AI / novel technology developers to move offshore too, in anticipation of AI overregulation," said Andre Omietanski, General Counsel, Aztec Labs.