The final encryption rules issued by the British Financial Conduct Regulatory Authority (FCA) mark the end of the British encryption regulatory framework. Under the new regulations, trading platforms, custodians, stabilizers and pledge service providers require FCA authorization to conduct business in the United Kingdom.
More clarity on compliance requirements
The new regulations cover capital adequacy, stress testing, and market abuse controls. The FCA also requires that the Platform conduct an audit prior to the currency and submit disclosure documents to the central repository maintained by the regulator. Retail customers will also be included in the financial grievance service for the first time in the future.
Stabilized coins and DeFi are included.
The stabilization currency would be subject to a separate standard. The FCA indicated that the requirements would be relaxed to some extent so that the rules would operate more closely to the market. The rules also extend to decentralised finance, provided that “identifiable control entities” exist and subsequent rules will continue to be published.
The timetable has been scheduled.
FCA plans to open pre-application meetings in July and to accept formal applications from 30 September to 28 February 2027, and the new system will enter into force on 25 October 2027. The Bank will work with the FCA to regulate large, systemically important stabilization currencies.
Additional information:The FCA also reduced the capital requirements of the issuer of the stable currency from 2 per cent to 1 per cent.