UK FCA Proposes Stablecoin Regulations to Enhance Consumer ProtectiThe UK's Financial Conduct Authority (FCA) has proposed regulations for stablecoins to enhance consumer protection and promote safe innovation. Here are the key details ¹ ²:

- *Regulatory Framework*: The FCA, in collaboration with the Bank of England, is developing a regulatory regime for fiat-backed stablecoins used as a means of payment. The proposed rules cover issuing, holding, and redeeming stablecoins.

- *Consumer Protection Measures*:

- *Full Reserve Backing*: Stablecoin issuers must back their tokens with high-quality, liquid assets equal in value to all outstanding stablecoins.

- *Guaranteed Par Redemption*: Stablecoin holders have an unconditional right to redeem their coins at par value with the issuer, with prompt payment expected within one business day.

- *Transparency Requirements*: Issuers must publish quarterly reports on the number of coins in circulation and reserve asset composition.

- *Crypto Custody Requirements*:

- *Segregation of Client Assets*: Firms providing crypto custody services must segregate client assets from their own assets.

- *Secure and Accessible Storage*: Custodians must ensure robust cybersecurity, private key management, and prompt asset return.

- *Prudential Regime*: The FCA proposes a tailored prudential framework, including:

- *Minimum Capital Requirements*: £350,000 for stablecoin issuers and £150,000 for crypto custodians.

- *K-Factor Capital*: Firms must hold additional capital proportional to their operations, using metrics like 2% of stablecoins in circulation or 0.04% of client cryptoassets safeguarded.

- *Timeline*: The FCA is seeking feedback until July 31, 2025, with final rules expected in 2026 and a possible transition period for existing firms.#TrumpMediaBitcoinTreasury

These proposals aim to balance innovation with consumer protection and financial stability, allowing stablecoins to potentially make payments faster and cheaper while minimizing risks ¹.