New FCA Crypto Rules Could Redefine Custody and Compliance
- The U.K.’s FCA proposes new rules that may redefine custody, impacting various crypto platforms.
- Firms holding client assets for over 24 hours during trade settlement will be classified as custodians.
- Validators and node operators must seek approval if they offer features like user dashboards or staking rewards.
- “Shadow custody” is addressed, stating providers can be considered custodians if they can theoretically override client authority.
- Stablecoin issuers must be U.K.-based and manage the entire lifecycle of the stablecoin to comply.
- Consultation on these proposals is open until June 3, with finalized rules expected by September.
The FCA’s proposed regulations aim to enhance consumer protection and ensure orderly markets as the crypto sector evolves. Firms must transition from current money-laundering registrations to a stricter approval regime under the Financial Services and Markets Act (FSMA).
Entities providing crypto services have until February 28,2027, to apply under new regulations or face fines and potential closure due to non-compliance. (Source)
