FCA Orders UK Crypto Firms to Hold Capital and Run Annual Stress Tests

The UK is about to make crypto firms act like the rest of finance. The Financial Conduct Authority unveiled a set of rules that force companies trading and holding crypto to keep capital against risky assets and run annual stress tests proving they can survive a market shock. The framework takes effect in October next year.

David Geale, the FCA's executive director for payments and digital finance, framed it as a milestone. "For the first time, we've got a comprehensive regulatory framework for crypto in the UK, one that covers how firms trade, how they hold assets, serve consumers and manage risk," he said. The same core principles that govern banks and brokers now apply to the firms holding your coins.

Capital buffers and self-written stress tests

The capital rule is the heavy part. Firms have to build a financial cushion to absorb losses from risky assets sitting on their balance sheets, the buffer that traditional finance treats as table stakes and crypto has mostly skipped. The stress tests come with a twist. Major UK banks get their crisis scenarios handed to them by the Bank of England. Crypto firms will write their own, based on internal risk assessments, then submit them to the FCA each year.

Industry pushback softens stablecoin rules

Industry lobbying already left a mark. After pushback, the regulator trimmed the capital required against some assets, including stablecoins pegged to fiat. The softening tracks a popularity boom fueled by social media influencers and a legitimisation drive under US President Donald Trump.

Regulation isn't a safety guarantee

The rules do not make crypto safe, and the FCA is not pretending otherwise. Investors are still warned they can lose everything. "Regulation provides stronger consumer protection and helps to reduce scams, misleading promotions and losses from poor practices," said Dan Coatsworth, head of markets at AJ Bell. "It can reduce risk but doesn't remove it completely." Geale's pitch to firms is narrower: they asked for clarity, and the rules give crypto "a solid foundation from which to build." The clock now runs to next October.