According to the official website of the UK Treasury, on April 29 (local time), the British government released a draft of new crypto asset regulations. Activities such as operating crypto exchanges, issuing stablecoins, custody, staking, market-making, and trade matching will be formally brought under the regulatory scope of the Financial Services and Markets Act 2000 (FSMA). These activities must meet standards for transparency, consumer protection, and operational stability. UK Chancellor of the Exchequer Rachel Reeves stated: “Through our reform plans, we are making the UK the most innovative and the safest place for consumers in the world.” This draft indicates the UK's intention to balance fintech innovation with consumer protection, transforming its previously fragmented approach into a more systemic regulatory framework.
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This new regulation, presented as an amendment to the Financial Services and Markets Act 2000, aims to construct a full-chain regulatory framework for crypto assets from multiple angles.
The new rules introduce definitions of “qualifying cryptoassets” and “qualifying stablecoins,” clearly outlining which crypto assets fall under the scope of regulation and providing a legal foundation for oversight.
(1) Qualifying cryptoassets: Assets that are fungible and transferable, excluding e-money and tokenized deposits.
(2) Qualifying stablecoins: Coins pegged to one or more fiat currencies and backed by reserve assets to maintain stable value.
Through amendments to the Regulated Activities Order (RAO), the following crypto-related activities are brought within the scope of regulated activities:
(1) Issuing qualifying stablecoins: Issuing stablecoins in the UK that are pegged to fiat currency.
(2) Custody services: Providing custody of qualifying cryptoassets and specified investment cryptoassets for clients.
(3) Operating crypto trading platforms: Running platforms that allow users to trade qualifying cryptoassets.
(4) Trading as principal or agent: Buying and selling qualifying cryptoassets either as principal or agent.
(5) Arranging crypto asset transactions: Arranging transactions in qualifying cryptoassets for others.
(6) Crypto asset staking services: Offering staking services for qualifying cryptoassets.
Service providers engaging in these activities must obtain authorization from the Financial Conduct Authority (FCA) and comply with relevant regulatory requirements, ensuring full transparency and safety in crypto-related activities.
The regulation provides a two-year transition period for crypto businesses already operating in the UK before the new framework takes effect, to ensure a smooth transition:
(1) Timeline: From the effective date of the new rules, existing companies have 24 months to apply for and obtain FCA authorization.
(2) Regulatory requirements: During the transition, firms must gradually meet new standards, including but not limited to capital adequacy, risk management, consumer protection, and transparency.
(3) Regulatory coordination: During the transition, the FCA will work closely with businesses, offering guidance and support to help them smoothly migrate to the new regulatory framework.
This approach reflects the UK government's commitment to both advancing crypto asset regulation and accommodating the real needs of industry development. It also allows regulators to build a comprehensive understanding of the market and develop supervisory capacity, ensuring effective implementation of the new framework.
The new regulations outline the following requirements for stablecoins:
(1) Reserve asset requirements: Issuers must hold equivalent high-quality, highly liquid reserve assets.
(2) Redemption mechanism: Users must be able to redeem stablecoins at face value.
(3) Governance and risk management: Issuers must comply with governance, risk management, and anti-money laundering regulations.
By treating the issuance, redemption, and stability mechanisms of qualifying stablecoins as separate regulated activities, the new rules bring them under the FSMA framework. These coins are explicitly defined as not being e-money, deposits, or investment funds. This move fills the regulatory gap around stablecoins in the UK and improves both market transparency and consumer protection.
In fact, the UK is not alone in paying close attention to stablecoin development. Recently, countries and regions like the US and Hong Kong have made significant regulatory advances, and Circle has successfully gone public in the US. Stablecoins have once again become a hot topic. On May 19 (local time), the U.S. Senate completed procedural legislation for the “Guiding and Enabling the Nation to Innovate for Ubiquitous Stablecoins Act” (GENIUS Act), removing key legislative hurdles. For the first time, the Act defines payment stablecoins in legal terms as digital assets with a primary function in payment settlement, pegged to a fixed fiat value. The Act requires strict 1:1 liquidity reserve standards, limiting reserves to U.S. dollars, short-term Treasury bonds, and government money market funds. It explicitly prohibits algorithmic mechanisms or volatile crypto assets as backing. The system is designed to integrate deeply with the U.S. payment infrastructure and regulated financial institutions, aiming to transition stablecoins from fringe tools to mainstream monetary instruments. This also lays a legal foundation for bridging digital and traditional finance. On May 21, Hong Kong’s Legislative Council formally passed the “Stablecoin Bill.” The bill states that no one may engage in "regulated stablecoin activities" without a license from the Monetary Authority unless exempted. These activities include issuing “designated stablecoins” in Hong Kong or issuing stablecoins pegged to the Hong Kong dollar outside Hong Kong. In other words, issuers must hold sufficient reserves, use compliant blockchains, and obtain licensing—thereby improving the virtual asset regulatory framework in Hong Kong while promoting financial stability and innovation. Hong Kong has become the first jurisdiction globally to introduce a comprehensive regulatory framework for fiat-pegged stablecoins. Compliant stablecoins from Hong Kong are expected to officially launch by the end of this year.
The regulatory approaches of the UK, US, and Hong Kong differ significantly, reflecting distinct strategic positions and logic: The UK emphasizes risk control + innovation-friendliness, allowing stablecoins to be pegged to one or more fiat currencies, with reserves including fiat and other assets. Issuers must establish entities in the UK and obtain FCA authorization, but no rigid capital thresholds are imposed—balancing innovation and safety. The U.S. GENIUS Act focuses on sovereignty first + dollar pegging, requiring stablecoins to peg only to USD and maintain reserves in cash, short-term Treasuries, or government funds. Issuers must be regulated financial institutions (e.g., banks), aiming to cement the dollar’s dominance in digital payments and reduce fiscal pressure via bond-backed reserves. Hong Kong adopts a compliance-first + cross-border gateway strategy. It pioneered a “value-pegged supervision” principle and mandates that overseas issuers of HKD-pegged stablecoins must be licensed and maintain a HK$25 million capital threshold. Its goal is to build a Web3 hub and test offshore RMB stablecoins. In essence, these differing frameworks reflect the global competition in financial sovereignty and innovation in the digital age. The UK offers openness to attract global projects, the US reinforces its dominance through the dollar, and Hong Kong leverages its geographic edge to build a regulated cross-border crypto hub.
According to a survey released by the UK’s FCA in November last year, around 12% of UK adults held crypto assets in 2024—almost three times more than the 4% in 2021. This shows rapid adoption in the country. However, the UK government also noted that due to underdeveloped regulations, the public faces frequent risks from high-risk companies and investment scams. This new regulation covers a wide range of regulated subjects and behaviors in the crypto field. It provides clear operational guidelines for crypto businesses operating in the UK, especially those working with stablecoins, and creates a safer and healthier investment environment for financial consumers—reducing the risk of being scammed or incurring unexpected losses.
In short, this draft regulation from the UK Treasury marks a major step in crypto asset regulation. Its goal is to establish a comprehensive, transparent, and resilient framework. By regulating critical areas like exchanges and stablecoins—and key activities like custody and staking—the UK is set to play a more significant role in global crypto asset regulation.
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