FCA Unveils Final Stablecoin Framework — What Issuers Must Know

London — The Financial Conduct Authority published its final rulebook for fiat-referenced stablecoins on Monday morning, ending nearly three years of consultation and giving UK-based issuers a definitive operating manual for the first time. The framework takes effect on 1 June 2026, with a 12-month transition window for tokens already in circulation.

At the centre of the regime is a hard requirement: any stablecoin marketed to UK persons or used for UK payments must hold 100% of its reserves in segregated accounts at Bank of England-approved custodians, with at least 60% in short-dated UK gilts and the remainder in cash or overnight reverse repos. Commercial paper, money-market funds and offshore deposits — all common in earlier stablecoin designs — are explicitly excluded.

What changes for issuers

Issuers must obtain a new "e-money and payment stablecoin" permission, which sits alongside the existing electronic money regime but adds bespoke obligations: daily attestations of reserve composition, monthly third-party audits, and a redemption guarantee of T+1 at par for any holder, retail or institutional. Failure to honour a redemption within the window triggers automatic FCA notification and potential suspension of the permission.

Governance requirements are equally prescriptive. Boards must include at least one non-executive director with prior central bank or prudential regulatory experience, and any change of control above 10% requires prior FCA approval. Marketing materials are subject to the consumer-duty regime in full — meaning sterling stablecoins cannot be promoted on yield, only on utility.

What it means for the market

City lawyers expect a wave of consolidation. Two of the four UK-domiciled sterling stablecoin projects had been operating under temporary permissions and will need to either raise additional capital to meet the new reserve composition rules or wind down in an orderly fashion. A third, backed by a high-street bank, has already confirmed it will apply for the full permission in Q3.

For overseas issuers — particularly the dollar-denominated giants — the framework introduces a recognition regime. Tokens issued under an equivalent overseas regulator (the FCA explicitly names the EU's MiCA and Singapore's MAS rules as starting points for assessment) can be passported into the UK after a streamlined review. Issuers without an equivalent home regulator face a much heavier bar.

Risks and open questions

Industry response has been broadly positive but not unanimous. The CryptoUK trade body welcomed the clarity but warned that the 60% gilt requirement could create concentration risk if a future stress event hits short-dated UK debt. Smaller fintechs have privately raised concerns that the daily attestation cost — estimated at £400,000 to £900,000 per year per issuer — will entrench incumbents.

The FCA has indicated it will publish supplementary guidance on algorithmic and crypto-collateralised stablecoins later in 2026; for now, both remain outside the perimeter and cannot be marketed to UK retail investors.

Daily Crypto News UK will host a live Q&A with two senior FCA officials on Friday at 13:00 BST. Subscribe to The Morning Brief for the joining link.