*The British fintech sector is on the brink of a major transformation!** *The Financial Conduct Authority (FCA) is launching new proposals for stablecoins!** *These ambitious measures aim to encourage innovation and enhance the international competitiveness of UK crypto firms.**
These regulations require that crypto custody services ensure optimal security and constant accessibility for consumers. The goal is also to reduce the risks of failure of crypto firms in the UK. With 12% of British adults owning crypto assets, the impact of these new rules could be significant. Let’s explore together what this means for the future of fintech.
Zengo est de loin le meilleur portefeuille NFT et crypto. Outre le fait d’être un portefeuille non-dépositaire, il privilégie la sécurité des utilisateurs en proposant le MPC. Zengo se démarque aussi par son authentification à 3 facteurs. Sa fonctionnalité multi-chaînes le permet en même temps de prendre en charge divers actifs numériques dont les blockchains les plus populaires.
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Are the FCA’s new stablecoin proposals too cautious and convoluted?
The stablecoin proposals from the Financial Conduct Authority (FCA) have recently sparked numerous reactions within the financial sector. While the main objective of the FCA is to support innovation and boost the competitiveness of British crypto companies internationally, some experts believe that these new regulations are overly cautious and complicated. This article explores the various facets of these proposals and the reactions they have generated in the sector.
What are the main features of the FCA’s new proposals for stablecoins?
The FCA has unveiled new proposals aimed at regulating the issuance of stablecoins in the UK. These proposals are intended to enhance the security of crypto asset custody services by requiring that custody firms provide effective protection for consumer funds and facilitate their access at all times. Furthermore, these regulations aim to reduce the risk of failure for cryptocurrency firms in the UK.
In alignment with the HM Treasury’s legislative projects published in April 2025, the FCA plans to closely collaborate with the Bank of England to establish a clear regulatory framework for stablecoins. The goal is not only to promote innovation but also to ensure that appropriate protections are in place for consumers, allowing them to access suitable financial products that offer fair value.
These proposals follow a consultation that had a deadline of July 31, 2025, with implementation expected in 2026. Among the proposed measures are the requirement for full reserves and the guarantee of a one-to-one buyback to bolster market confidence and encourage widespread adoption of stablecoins.
How is the sector reacting to the new regulations proposed by the FCA?
Reactions within the stablecoin sector are varied. On one hand, some players see the FCA’s proposals as a positive step towards greater regulatory clarity, essential for the development and adoption of stablecoins in the UK. Matthew Osborne, director of UK and Europe policy at Ripple, expressed his support by emphasizing that clear regulations pave the way for innovation and sector growth.
On the other hand, some experts argue that the proposals are too complex and restrictive. Daniel Taylor, head of policy at the platform Zumo, expressed reservations about the definition of stablecoins and their classification as investments rather than payment means. This approach could complicate the use of stablecoins for everyday transactions and limit their adoption.
Furthermore, Martin Dowdall, a partner specializing in financial services regulation at Taylor Wessing, highlighted the need for a clearer definition of stablecoins and fiat-crypto exchange services. According to him, the lack of clarity could lead to difficulties for companies seeking to comply with the new regulations.
What are the potential benefits of the new regulations for the stablecoin market in the UK?
The new regulations proposed by the FCA offer several potential benefits for the stablecoin market in the UK. By imposing strict security and transparency requirements, these regulations aim to strengthen consumer and investor confidence, which is crucial for the large-scale adoption of stablecoins.
Another key advantage is the regulation’s ability to encourage innovation while maintaining high consumer protection standards. For example, the anticipated collaboration between the FCA and the Bank of England will create a harmonized regulatory framework, thereby facilitating the competitiveness of British companies in the international crypto asset market.
Moreover, these regulations could attract new players to the British market by providing a clear and predictable regulatory environment. Innovative companies like Mastercard are already partnering with crypto platforms to facilitate cryptocurrency payments, and clear regulations will allow them to develop their services with confidence.
What criticisms have experts raised regarding the FCA’s proposals?
Despite the positive aspects, several criticisms have been raised by experts in the field. Some believe that the FCA’s proposals are too cautious and lack flexibility, which could stifle innovation. Daniel Taylor from Zumo notably pointed out that limiting the requirements to stablecoins issued in the UK could exclude many international players, thus limiting the competitiveness of the British market.
Moreover, the classification of stablecoins as investments rather than payment means has been particularly criticized. This approach could impose unnecessary restrictions on users wishing to use stablecoins for everyday transactions. Educating consumers and offering more flexible use of stablecoins are points that some experts view as neglected in the current proposals.
Another point of critique concerns the vague definition of “qualifying stablecoins,” creating confusion between stablecoins and e-money. Martin Dowdall of Taylor Wessing indicated that this uncertainty could complicate compliance for companies and create further challenges for the sector.
How do the FCA’s proposals compare to international regulations?
When comparing the FCA’s proposals to international regulations, it is evident that each jurisdiction adopts a different approach to stablecoins. While the European Union has established the MiCA regulation, providing detailed but complex regulation, the UK is trying to find a balance between clarity, flexibility, and consumer protection.
The FCA seems to draw inspiration from international models while seeking to adapt specifically to the British market. For example, unlike Singapore or the United Arab Emirates, which offer lighter regulations for small businesses, the UK proposes a stricter framework that aims to maintain proximity to international standards while promoting innovation.
Additionally, in the United States, the ongoing discussions around the GENIUS Act show a trend towards proactive yet considerate regulation, similar to the efforts of the FCA. This convergence of international regulatory efforts could facilitate better harmonization of rules, making stablecoins more accessible and secure on a global scale.
What are the future prospects for stablecoins in the UK following the FCA’s proposals?
The FCA’s proposals lay the groundwork for a more secure and regulated stablecoin market in the UK. If these regulations are implemented effectively, they could strengthen user and investor confidence, thereby stimulating the widespread adoption of stablecoins.
The emphasis on security and transparency should also attract new players to the British market, eager to take advantage of a stable and predictable regulatory framework. Companies will thus be able to innovate and develop new financial products based on stablecoins, fostering sustained economic growth in the fintech sector.
Moreover, the anticipated collaboration between the FCA and the Bank of England could serve as a model for other jurisdictions, positioning the UK as a leader in the regulation of crypto assets. This leadership position could attract more foreign investment and enhance the UK’s competitiveness in the global cryptocurrency market.
However, it is crucial for the FCA to continue adjusting its regulations in line with the rapidly evolving crypto asset market. The flexibility and adaptability of regulations will be essential to ensure that the UK remains at the forefront of innovation while ensuring the safety and protection of consumers.
Concrete examples of the impact of regulations on fintech companies
Several fintech companies in the UK have already begun adapting their strategies in response to the FCA’s new regulations. For instance, Zepz, a real-time money transfer platform, recently raised $165 million in funding led by HSBC Innovation Banking to boost its growth. This funding will allow Zepz to comply with new security requirements while innovating in its fund transfer services.
Similarly, Inxy Payments raised $3 million in funding led by Flashpoint VC to transform global cryptocurrency payments for businesses. This capital injection will enable Inxy Payments to develop solutions in compliance with the FCA’s regulations, thus facilitating cryptocurrency payments for businesses.
These examples demonstrate how regulations can both pose challenges and open opportunities for fintech companies. By complying with the new rules, these companies can not only avoid potential penalties but also benefit from a safer and more stable market environment to develop their innovations.
How can the FCA improve its proposals to better support innovation?
To maximize the positive impact of regulations, the FCA could consider several improvements. Firstly, providing more clarity in the definition of stablecoins and their classifications, to reduce confusion among businesses and consumers. A precise definition would help companies better comply and innovate without fear of violating regulations.
Furthermore, the FCA could establish testing periods and regulatory sandboxes, allowing startups to develop and test their solutions in a controlled environment before full compliance. This approach would promote innovation while maintaining high safety standards.
In addition, strengthening collaboration with other international regulators could help harmonize global regulations, thereby making fintech companies’ operations smoother and less complex. Increased collaboration with institutions like the Bank of England and other key industry players could also contribute to better implementation of the regulations.
Finally, the FCA should engage in ongoing dialogue with stakeholders in the fintech sector to gather feedback and adjust regulations according to technological developments and market needs. This proactive approach would ensure that regulations remain relevant and effective in an ever-evolving technological landscape.
What are the next steps for the FCA and the stablecoin market in the UK?
Following the consultation period that ended in July 2025, the FCA is preparing to finalize and implement its regulatory proposals for stablecoins in 2026. Fintech companies will then need to adapt their business models and enhance their compliance mechanisms to meet the new requirements.
As part of these next steps, it will be essential to monitor the impact of the regulations on the market and adjust policies based on feedback. The FCA could also organize workshops and training sessions to help companies navigate the new regulations and fully leverage the opportunities presented by the regulatory framework.
In parallel, the ongoing rise of stablecoins and technologies related to crypto assets in the UK could pave the way for new financial innovations, thereby stimulating economic growth and reinforcing the UK’s position as a global leader in the fintech sector.
To stay informed about the latest news and developments in the field of stablecoins and crypto assets, feel free to check out our other articles:
- Zepz in the UK raises $165 million in funding led by HSBC Innovation Banking to boost its growth
- Inxy Payments raises $3 million in funding led by Flashpoint VC to transform global cryptocurrency payments for businesses
- Understanding DeFi: decentralized finance
- Mastercard partners with Kraken to facilitate cryptocurrency payments in the UK and Europe
- COLB Asset raises 6 million CHF to promote the tokenization of real assets
