The UK Financial Supervisory Authority plans to charge stablecoin issuers and digital asset custodians to recover US$8 million in regulatory costs

The UK Financial Conduct Authority (FCA) plans to withdraw the £6.2 million (approximately $7.9 million) fee required for regulatory activities related to new stablecoin regulations and the wider regulatory regime. .

The UK Financial Conduct Authority (FCA) announced on March 19, 2024, that it plans to cut costs from stablecoin and cryptocurrency regulation, which is expected to save approximately $8 million.

These funds will be recovered in the form of fees charged to stablecoin issuers and digital asset custodians.

The regulator has two main financial recovery goals, both related to the regulation of crypto assets. First, the FCA plans to recover 6.2 million pounds (approximately $7.9 million), which is related to the newly implemented stablecoin regulations and the broader regulatory regime. A stablecoin is a cryptocurrency whose value is typically pegged to some traditional currency or other asset to remain relatively stable. The FCA’s regulation of stablecoins may include ensuring that issuers comply with specific laws and rules to protect investors and the market.

Secondly, FCA also plans to recover 200,000 pounds (approximately $254,400), which will be used to expand the scope of its financial sales. Financial sales may involve advertising financial products and services, including crypto-assets, to the public. By expanding the scope of financial sales, the FCA may aim to strengthen supervision of advertising and sales activities in the cryptocurrency market, ensuring that these activities are transparent to consumers and not misleading.

The recovery of these two funds will be achieved by levying fees on stablecoin issuers and digital asset custodians. The fees will be included in the FCA’s “crypto-asset” category to support its regulatory mandate in the cryptocurrency space.

Total costs to be recovered are £6.4 million ($8.1 million). The recovered funds will contribute to FCA's annual funding requirements, which total 755 million pounds ($960 million).

This recall is part of the agency’s 12-month business plan, which details additional regulatory objectives for the UK market. The FCA will continue to support the development of appropriate digital asset market abuse regimes and will continue to advance its earlier cryptocurrency financial promotion regime.

The full business plan is wide-ranging and goes well beyond the scope of cryptocurrency regulation. It includes plans to regulate digital markets and assess the impact of artificial intelligence on the market.

Early Development

The formulation and implementation of new stablecoin regulations promoted by the UK Financial Conduct Authority (FCA) starting in November 2023 will provide the background and foundation for some of the agency's current and future regulatory plans. The costs associated with the new regulations appear to be related to the stablecoin regulations the agency is pursuing starting in November 2023.

The upcoming market abuse regime builds on rules that came into force in 2016. The rules address insider trading, illegal disclosures and market manipulation, but were not originally targeted at the cryptocurrency space. The UK has been considering extending these rules to cryptocurrencies since at least February 2023.

The FCA has launched its financial sales regime. These rules will apply to the cryptocurrency space in October 2023. Some cryptocurrency companies have withdrawn from the UK market due to compliance challenges; others have been placed on warning lists.

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