FCA and the Bank of England set out approach to joint regulation of systemic stablecoin issuers

The Bank of England and the Financial Conduct Authority have published a joint approach setting out how they — and, where relevant, other authorities — will work together to regulate systemic stablecoin issuers in the United Kingdom, the FCA said in a statement logged on 2 July.

The approach explains how responsibilities will be split between the authorities, and how UK stablecoin issuers may move from FCA supervision to joint regulation once they are recognised as systemic by HM Treasury, per the statement. The stated aim is to provide clarity and predictability for firms as the market develops.

The statement itself is an overview: the detailed division of responsibilities and the mechanics of the transition are set out in the joint paper it accompanies, to which both regulators direct firms.

Background

Stablecoins are cryptoassets designed to hold a steady value, typically by pegging to a fiat currency such as sterling or the dollar and backing issuance with reserve assets. Their regulatory significance rises with scale: a coin used widely enough for payments becomes infrastructure, and a run on its reserves could transmit stress to the wider financial system — the scenario the “systemic” designation exists to manage.

The UK framework flows from the Financial Services and Markets Act 2023, which brought fiat-backed stablecoins into the regulatory perimeter and gave HM Treasury the power to designate payment systems and service providers as systemic, bringing them under Bank of England oversight. The joint approach reflects the UK's twin-peaks architecture: the FCA supervises conduct and issuance for the sector at large, while the Bank takes responsibility for entities whose failure could threaten financial stability — with Treasury designation acting as the gateway between the two regimes.

What comes next

The operative trigger to watch is HM Treasury recognition: an issuer's move from FCA supervision to joint regulation happens only once the Treasury designates it as systemic, per the statement. Firms will be parsing the full paper for the designation criteria, the allocation of rulemaking between the two authorities, and the transition arrangements that would apply to the first coins to cross the systemic threshold.