- FCA seeks input on stablecoin plans, aims to boost innovation and economic opportunity.
- Businesses must establish robust systems to prevent fraud and protect digital assets.
- DOL now allows crypto in retirement plans, dropping prior warnings and restrictions.
The UK’s Financial Conduct Authority (FCA) is seeking more feedback on its proposed stablecoin framework. On Wednesday, the FCA announced plans to expand its innovation services to cover stablecoins in the near future. This move aims to support the benefits that stablecoins offer to the financial services and broader economy.
The new rules issued by the FCA are designed to protect the stable value of stablecoins. They also want to protect stablecoin and cryptocurrency custody firms from possible bankruptcy. Ever since the collapse of terraUSD in 2022, authorities have been looking more closely at stablecoins. As a result of that event, investors suffered large losses, which led to further regulatory oversight.
UK FCA Strengthens Stablecoin Rules with Industry Feedback
Since 2023, the FCA has been rolling out a new crypto regime. The regulator published a discussion paper proposing a stablecoins regime that same year. Since then, it has released several discussion papers to engage the public and industry. Meanwhile, the UK government is drafting legislation to empower regulators with the authority needed to enforce these new rules for the digital asset sector.
“For those stablecoins that expect to operate at systemic scale, the Bank of England will publish a complementary consultation paper later this year, including responding to industry feedback around allowing some return on backing assets,” Sarah Breeden, deputy governor for financial stability at the Bank of England, said.
The FCA is urging businesses to implement strong governance systems to prevent unauthorized access and illegal activities. These rules aim to reduce fraud, cyberattacks, and operational errors in crypto custody. Firms must also maintain insurance or safeguards to protect digital assets from loss.
The FCA has asked trade groups, lawyers, auditors, and crypto custody organizations to share their thoughts and ideas. By utilizing the RPM, the FCA can more effectively respond to today’s challenges and design regulations tailored to the market. What is learned from the feedback will be used in developing detailed rules, which are expected to be put in place in 2026.
Related: Ukraine Set to Launch Bitcoin Reserve Backed by Binance
U.S. Labor Department Removes Crypto Warning for Retirement
On the other hand, the U.S. Department of Labor (DOL) reversed its prior caution against including cryptocurrency in retirement plans. The agency announced on Wednesday that its 2022 guidance unfairly singled out digital assets, violating impartiality standards. The move aligns with President Donald Trump’s administration’s ongoing efforts to ease barriers to crypto investments.
Besides removing specific warnings, the DOL emphasized that fiduciaries retain full discretion under the Employee Retirement Income Security Act (ERISA). This change may influence retirement plans to reconsider digital assets.
