The UK Financial Conduct Authority will activate its stablecoin issuance regime on 25 October 2027, anchoring a deliberately split framework that puts non-systemic tokens under FCA supervision and routes systemically important stablecoins to joint oversight with the Bank of England, law firm Dentons said in a 16 July 2026 analysis.

The structure rests on two legislative instruments. The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 created regulated activity 9M for issuing a qualifying stablecoin (UKQS), giving the FCA its rule-making power. The Financial Services and Markets Act 2000 (Cryptoassets) (Amendment) Regulations 2026 then carves UKQS out of certain dealing and arranging activities, treating FCA-authorised stablecoins as payment instruments rather than purely cryptoassets. HM Treasury remains the gatekeeper for systemic designation under the Banking Act 2009.

What does the FCA regime require?

The FCA's final rules, published as PS26/10: Stablecoin Issuance, impose a strict set of conditions on non-systemic UKQS issuers:

• Issuers must hold a backing asset pool on statutory trust, segregated from the issuer's own assets and from other stablecoin pools. No more than 20% of the pool may sit with an intragroup custodian.
• A limited surplus of up to 5% above the required amount is permitted to absorb redemption fluctuations.
• The On-Demand Deposit Requirement (ODDR) forces issuers to keep at least 5% of the pool in on-demand deposits for immediate liquidity.
• Firms that opt for expanded backing assets must satisfy a Backing Asset Composition Requirement (BACR) combining ODDR with a Core Backing Asset Requirement (CBAR), set at the higher of 5% of the pool or the largest daily redemption percentage over the previous 180 redemption days.
• Redemption must complete by the end of the next business day (T+1), though the clock does not start until financial-crime checks are complete and the issuer has received the stablecoin in its wallet.
• Issuers must publish a Qualifying Cryptoasset Disclosure Document (QCDD) on their website and on the FCA repository, updating fast-moving data at least every three months and retaining historic versions for five years.

The FCA declined to broaden eligible assets to lower-volatility money market funds, judging the narrower list to balance commercial viability with consumer protection. It also warned that a mismatch between minted UKQS and the backing pool could trigger a "run" on the stablecoin, with simultaneous redemptions driving secondary-market losses.

What changes for systemic issuers?

Systemic stablecoins face the Bank's prudential regime, set out in its 22 June 2026 Policy Statement on sterling-denominated systemic stablecoins. The backbone is a 70/30 split: 70% short-term UK government debt securities and 30% unremunerated central bank deposits in steady state. Overnight repo and reverse repo transactions are permitted within tight parameters to preserve 1:1 backing.

The Bank will also impose a temporary issuance guardrail of £40 billion per systemic stablecoin, to be loosened once credit-provision risks are judged manageable. Capital rules adapt the CPMI-IOSCO Principles for Financial Market Infrastructures to issuer-specific risks, splitting between general business risk and risks to token-holders.

Redemption must complete within 24 hours of a full request — meaning after financial-crime checks — and the Bank will not permit suspensions. Systemic issuers must obtain direct access to payment systems rather than routing through a sponsoring participant, a change the Bank will phase in over a transition period of 12 to 36 months.

HM Treasury decides systemic status in consultation with the Bank, FCA, Payment Systems Regulator and the Prudential Regulation Authority, weighing scale, substitutability, interconnectedness and use by the Bank in its monetary authority role. Recognition can happen at launch or later, triggering a transition to joint supervision.

What must firms do now?

Dentons flagged four operational priorities for firms planning UK entry:

• Governance and risk management: Boards must oversee daily reconciliation, custody, disclosure and prudential compliance throughout a stablecoin's lifecycle.
• Treasury: Scaling firms should plan early for the move from the FCA's backing-asset regime to the Bank's prescriptive 70/30 split.
• Redemption: Build T+1 capability at launch, with a pathway to the Bank's 24-hour standard.
• Disclosures and data: Systems must produce auditable information on backing assets, circulation, redemptions and risks.

The FCA regime takes effect on 25 October 2027, but the Bank's systemic framework will continue to evolve through further consultation on the Code of Practice, supporting guidance, reporting and record-keeping requirements, backing-asset trust arrangements and failure-management rules during 2027.