FCA’s Prudential Plans for Crypto Firms (CP25/15)

The Financial Conduct Authority (FCA) has released Consultation Paper CP25/15, setting out proposals for a new prudential framework for cryptoasset firms in the UK. This initiative aims to support the safe and sustainable growth of the sector by introducing basic rules around capital, liquidity and risk management. The proposals focus on two types of firms:

Those issuing qualifying stablecoins (as defined under UK legislation); and

Those safeguarding qualifying cryptoassets for clients.

Why This Matters

The FCA’s proposals are designed to ensure that cryptoasset firms:

Maintain sufficient financial resources to absorb operational and market shocks;

Operate transparently and to consistent standards;

Protect client funds and meet redemption obligations;

Adhere to proportionate, risk-based prudential rules;

Compete within a stable and well-regulated environment.

Who is Covered?

The proposals apply to UK-based firms that are authorised, or seeking authorisation, to carry out cryptoasset activities such as:

Issuing qualifying stablecoins (i.e. digital tokens backed by fiat currency and defined under UK legislation);

Safeguarding qualifying cryptoassets on behalf of clients.

Note: These rules apply only to activities conducted within the UK regulatory perimeter. Overseas only or unregulated firms are not in scope.

These firms would follow rules set out in two new FCA rulebooks:

COREPRU: General rules covering financial resources and risk management;

CRYPTOPRU: Extra requirements specific to crypto activities.

Capital Requirements: Three Options

Firms would need to hold a minimum amount of capital, based on whichever of the following is highest:

Fixed Minimum:

£350,000 for stablecoin issuers;

£150,000 for custodians.

Spending-Based:

One-quarter of the firm’s fixed overheads from the previous year.

Activity-Based:

2% of stablecoins in circulation;

0.04% of the value of cryptoassets held for clients.

The FCA is seeking feedback on whether simplified or reduced capital and liquidity rules could apply to smaller or lower-risk firms. This proportional approach aims to preserve market access and avoid creating unnecessary barriers to entry.

Liquidity Requirements

Firms must also hold liquid assets (cash or similar) to meet short-term costs:

Basic liquidity buffer: Equal to one – third of the spending-based requirement;

Extra buffer for stablecoin issuers: To protect against price changes in the assets backing the coins.

These funds should be held in safe, easily accessible forms like UK bank deposits or government bonds.

Managing Risks

Firms must actively manage concentration risk by setting limits on exposures to clients, service providers, custodians, and other counterparties.

The FCA expects firms to:

Set internal thresholds for acceptable exposure levels;

Regularly assess and monitor these exposures; and

Embed risk oversight into governance arrangements, including board-level responsibility.

These measures are intended to reduce systemic vulnerabilities and promote sound prudential management.

Next Steps for Firms?

The FCA is inviting feedback until 31 July 2025. This consultation is part of a wider roadmap to regulate other crypto related services such as trading platforms and staking.

How Can Complyport Help?

Complyport offers support to help firms prepare for these new requirements. Our services include:

Authorisation Support: Assisting firms in preparing FCA authorisation applications under FSMA for cryptoasset activities.

Prudential Capital Planning: Calculating capital requirements using the three-tiered approach: fixed, spending-based, and activity-based.

Liquidity Risk Management: Designing liquidity frameworks to meet the FCA’s proposed minimum buffer and additional requirements for stablecoin issuers.

Risk and Governance Frameworks: Enhancing board governance and risk oversight to align with FCA’s prudential expectations for senior management accountability.