In a single sweep, the FCA’s new consultation paper CP25/15 drags Britain’s crypto industry out of its post-adolescent haze and into the cold light of prudential regulation.
Issuers of £-pegged stablecoins will need the higher of a £350k capital floor, three months’ operating expenses, or a 2 % slice of every token in circulation; custodians face a £150k floor or 0.04 % of client coins, whichever bites harder. On top of that, one-third of those fixed costs must sit in sterling cash, gilts, or money-market funds at all times, while exposures to any single bank, client group, or pool of reserve assets have to be tracked like radioactive isotopes. Consultation closes 31 July 2025, with rules expected to land in 2026. For UK-based crypto outfits, the message is blunt: raise real equity, hold real cash, and stop treating systemic risk as someone else’s problem.
CP25/15
The FCA is finally giving crypto its own prudential rule-book (CRYPTOPRU) instead of wedging firms into MiFID or e-money corners. The regulator wants a sector that “enables innovation and is underpinned by market integrity”. In plain English: keep building, but bring a crash helmet.
Across the Channel, MiCA already demands €350k plus 2 % of reserves from euro stablecoin issuers. CP25/15 mirrors those numbers but adds liquidity and concentration rules, an extra belt for the same pair of trousers. The consultation also dovetails with wider FCA moves to ban retail borrowing for crypto punts and to ring-fence 1:1 backing assets under CP25/14.
From Magic Beans to Tier 1
Permanent Minimum Requirement (PMR)
Think of the PMR as a non-negotiable safety buffer: £350k for issuers, £150k for custodians. It’s small by banking standards but huge for lean start-ups that have survived on token presales and chutzpah.
Fixed-Overhead Requirement (FOR)
Three months of last year’s fixed costs (rent, salaries, audit fees) must sit in own-funds. If you spent £2 m keeping the lights on, you now need £500k of hard capital before sending a single tweet.
K-Factors
The FCA borrows from its investment-firm regime:
- K-SII (2 % of stablecoins in issue) soaks up redemption risk.
- K-QCS (0.04 % of crypto assets held for clients) prices the headache of losing someone’s Bitcoin.
Whichever of PMR, FOR, or K-Factor is biggest becomes your Own-Funds Requirement. In practice, growing balance sheets will push most firms beyond the PMR within months.
Cash Is Still King
Firms must park one-third of the FOR in “core” liquid assets (sterling cash, BoE-backed gilts, or short-term money-market funds). That gives roughly a month’s runway to unwind in an orderly fashion if the music stops.
Issuers also face a separate Issuer Liquid Asset Requirement (consulted but not yet quantified) that treats the reserve pool with fragility. After the USDC-SVB panic of 2023, nobody wants to explain why reserves were parked in the crypto equivalent of a shed with a leaky roof.
Don’t Put All Your Stablecoins in One Bank
Chapter 6: monitor exposures to counterparties, sub-custodians, even clusters of “connected clients.” Firms must document limits and diversify if any bucket overflows. The lesson of every crisis (from Lehman to FTX) is that correlation loves company.
What Each Acronym Means
| Term | Translation |
|---|---|
| CET1, AT1, T2 | Different flavours of shareholder funds and subordinated debt. The FCA wants at least 56 % of capital in top-quality CET1. |
| BLAR | Basic Liquid Assets Requirement: the “cash-in-a-glass-case” equal to 1/3 × FOR. |
| ICARA | Future self-assessment that may force even more capital once risk models mature. |
| COREPRU vs CRYPTOPRU | COREPRU is the generic prudential spine; CRYPTOPRU bolts on the crypto-specific ribs. |
Who Hurts, Who Benefits?
- Bootstrapped Start-ups will need fresh equity or convertible notes; token treasuries no longer count unless sold for cash.
- Custody Specialists gain an edge if already capitalised; smaller rivals may seek mergers.
- Bank-Backed Ventures suddenly look respectable: capital is table stakes they already pay in other divisions.
- Investors & Clients get clearer solvency signals; less chance their assets vanish into 3AC-style black holes.
What You Can Do
- Run the Numbers – Calculate PMR, FOR, and K-Factors on a six-month look-back; whichever is highest is your new north star.
- Reshape Treasury – Shift at least 33 % of FOR into gilts or BoE deposits; reassess yield vs. liquidity.
- Map Concentrations – Export every wallet, bank, and counterpart exposure; set internal red lines before the FCA does.
- Raise Capital Early – Equity markets hate regulatory fire drills. Better to close a round now than in Q2 2026 when every competitor is shopping for the same cheque.
- Engage the Consultation – CP25/15 is still draft. If a rule wrecks your model, argue politely before 31 July 2025.
How Does This Stack Up Against MiCA?
Both regimes ask for roughly 2 % of reserves and a modest fixed floor, but the FCA’s BLAR is more prescriptive and sterling-centric. UK firms may find reporting simpler (one regulator, one currency) yet more expensive (holding low-yield gilts instead of treasuries or T-Bills). Cross-border groups will juggle two prudential languages.
What Happens Next?
- Now → 31 July 2025 – Comment period; expect lobbying from fintech associations.
- Autumn 2025 – FCA policy statement; possible tweaks to capital ratios.
- Early 2026 – Go-live, probably with transitional relief for smaller firms.