DP23/4: Regulating cryptoassets Phase 1: Stablecoins

Read DP23/4 (PDF)[2]

Why we are consulting

We are using this Discussion Paper (DP) to help develop our regime for fiat-backed stablecoins including when used as a means of payment.  The Treasury’s recent Policy Statement[3] sets out their intention to define fiat-backed stablecoins in legislation, expecting it to capture those stablecoins which seek to maintain a stable value by reference to a fiat currency, and hold (in part or wholly) currency as ‘backing’. The Treasury is also considering making changes to the payments legislation to enable retail payments for goods and services to be made using fiat-backed stablecoins. This includes an option the Treasury are exploring to allow certain stablecoins which are issued outside of the UK (overseas stablecoins) to be used for payments.

Our DP will be a part of a joint publication package with the Bank of England’s Discussion Paper[4] on systemic payment systems using stablecoins and related services providers, and the Prudential Regulation Authority’s Dear CEO letter[5] on innovative uses of deposits, e-money and stablecoins. To accompany these publications, we are also publishing a joint ‘Roadmap paper’[6] with the Bank and Prudential Regulation Authority which aims to explain how our proposed regimes interact and our approach for dual regulation. 

Who this is for

This DP will interest anyone in the UK who has bought, or may in the future buy, fiat-backed stablecoins. This regime will also interest organisations and individuals that participate in the cryptoasset sector (specifically, cryptoassets that claim a form of stability and make use of a stabilisation mechanism).  

It will particularly interest:  

• firms or individuals that design, issue or maintain a fiat-backed stablecoin  
• firms that provide custody for, or safeguarding ownership of, fiat backed stablecoins – or the ‘private keys’ to access them (this will include any entity that takes custody of stablecoin, no matter how briefly, for example an exchange that does so to facilitate a trade)  
• retail payment service providers, which may consider using fiat-backed stablecoins as an alternative means of payment  
• cryptoasset firms providing services to UK consumers for fiat-backed stablecoins industry groups/trade bodies  
• professional advisors  
• consumer groups and individual consumers  
• policy makers and other regulatory bodies 
• industry experts and commentators  
• academics and think tanks

Next steps 

On 30 June 2026, we published our final rules and guidance[7], which will apply to all cryptoasset firms which have been authorised to operate under FSMA on or after 25 October 2027.

Background 

The Government has announced plans to legislate for a future financial services regime for cryptoassets. It is taking a phased approach, focusing initially on fiat-backed stablecoins that may be used as a form of payment, followed by the wider cryptoasset regime.  

Under these plans, we will regulate the issuance and custody of fiat-backed stablecoins under the Financial Services and Markets Act 2000, and the use of these stablecoins as a means of payments under the Payment Services Regulations[8] (PSRs).