UK watchdog eases crypto capital rules ahead of 2027 regime

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UK eases crypto capital rules

Highlights

Financial Conduct Authority will implement new UK crypto regime from October 2027, with applications opening September 30, lowering capital requirements across the sector.
FCA cuts extra capital requirement for non-systemic stablecoin issuers to 1 per cent of issuance from 2 per cent, and reduces trading book capital coverage from 100 per cent to 40 per cent of net exposure value.
Revised framework eliminates public disclosure of capital requirements for smaller and lower-risk firms, aiming to attract 3mn to 4mn additional UK crypto customers by boosting confidence.

Revised framework for stablecoins and trading firms

As first reported by Financial Times, the Financial Conduct Authority says its new regime for UK crypto companies will apply from October 2027, with applications opening from September 30. The regulator says it has lowered capital requirements for stablecoin issuers and crypto trading companies, while smaller firms and those with less risky activities will no longer have to publicly disclose their capital requirements.

The FCA says the changes are designed to reflect specific risks rather than impose blanket rules across the sector. It estimates the framework could bring an additional 3mn to 4mn customers into UK crypto markets by increasing confidence.

David Geale, executive director for payments and digital finance at the FCA, says the regime gives crypto “a solid foundation” and describes it as the biggest expansion of the watchdog’s scope in at least a decade. He also says crypto remains a high-risk investment, even as the regulator accepts there is a place for such assets in some consumer portfolios.

On Monday, the FCA says it has cut the extra capital requirement for issuers of non-systemic stablecoins to 1 per cent of issuance from 2 per cent. It also says firms holding crypto tokens in their trading book will need capital covering 40 per cent of net exposure value, replacing an earlier proposal that would have imposed a 100 per cent requirement on some riskier tokens.

The regulator is also easing rules on liquidity, intragroup custody and pre-trade transparency for crypto groups. Geale says the FCA adjusted the proposals after hearing from the market that its starting point on capital was too high.

Our earlier report on Ionic Digital’s planned Nasdaq direct listing outlined how the company, formed from the reorganization of Celsius Mining, is preparing to enter public markets under the ticker IOND. We noted that the listing would let existing shareholders sell registered shares while the firm positions itself beyond bitcoin mining by expanding into AI infrastructure, supported by a recent $400 million funding round.

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