The FCA's Stablecoin Endgame: What PS26/10 and the BoE Joint Framework Mean for Issuers

On 30 June 2026, the Financial Conduct Authority published PS26/10 — its final policy statement on stablecoin issuance in the United Kingdom. Alongside the Bank of England's draft Code of Practice for systemic sterling stablecoins, the document marks a decisive moment: the UK has moved from consultation to implementation. With the FCA's authorisation gateway opening on 30 September 2026 and the full regime taking effect on 25 October 2027, firms now have a narrow window to prepare.

What PS26/10 Covers

PS26/10 finalises the rules for all UK-issued qualifying stablecoins, following two consultation papers (CP25/14 and CP25/41). The framework is built on three pillars: backing and safeguarding, redemption, and conduct and prudential standards. The rules cover the full lifecycle of the token — from minting to redemption — and apply regardless of whether the issuer is later designated as systemic.

Backing Assets: Conservative but Not Rigid

The FCA has opted not to expand the list of permissible backing assets or to allow multi-currency backing pools, a decision driven by concerns about volatility. However, it has left the door open for tokenised versions of permitted backing assets, signalling awareness that the market is evolving beyond traditional custody. The backing asset composition requirement — previously known as the backing asset composition ratio — has been simplified. Issuers no longer need to estimate projected redemption levels, reducing the operational burden of compliance. A 5% buffer in the backing asset pool is permitted, and intragroup custodians may hold up to 20% of the pool (with limited exceptions).

Crucially, the FCA has confirmed that all UK-issued qualifying stablecoins must be fully backed from the point of minting, including tokens the issuer holds itself. The backing asset pool will be subject to a statutory trust for the benefit of stablecoin holders, though a separate consultation will follow on the precise terms of that trust.

No Interest, but the Door Is Not Locked

One of the most debated provisions is the prohibition on paying interest or yield from backing assets to stablecoin holders. The FCA has maintained this ban and extended it to third parties to prevent circumvention — a direct response to industry proposals for yield-bearing stablecoin wrappers. Third parties will still be permitted to pay rewards, but these must be distinct from yield derived from the reserve. The FCA has signalled, however, that it will conduct additional work on the competition and economic implications of offering interest, a formulation that leaves the policy open to future revision.

Redemption: T+1 with a KYC Adjustment

Holders must be able to redeem at par. The standard timeline is T+1 — by the end of the next business day after the issuer receives the stablecoin — but the FCA has adjusted the rules so that KYC checks can be completed before the redemption clock starts. Issuers also have flexibility in choosing the legal mechanism that enables redemption rights to transfer with the stablecoin, a pragmatic concession to the diversity of token standards in the market.

The Systemic Layer: BoE and FCA Joint Regulation

PS26/10 governs non-systemic issuers. For stablecoins that become widely used in payments and may pose risks to financial stability, a parallel framework kicks in. HM Treasury can designate an issuer as systemic, at which point the Bank of England and the FCA assume joint regulatory responsibility. The BoE published its own policy statement and draft Code of Practice for sterling-denominated systemic stablecoins in June 2026, alongside a joint approach document with the FCA.

The authorities have designed a two-tier regime with proportionate requirements and a smooth transition path. A firm could even be recognised as "systemic at launch" if HM Treasury determines it is likely to reach systemic scale. The BoE's rules are anchored in its financial stability mandate and are more stringent than the FCA's, which are driven by consumer protection, market integrity, and competition objectives.

The Bigger Picture: UK vs US and EU

The timing is notable. The US GENIUS Act, which establishes a federal framework for payment stablecoins, is still awaiting full implementation. The EU's Markets in Crypto-Assets Regulation (MiCA) has been in force since late 2024 but continues to face practical challenges in cross-border enforcement. The UK is positioning itself as a jurisdiction with rules that are clear, final, and designed to accommodate innovation — particularly through its openness to tokenised backing assets and its willingness to revisit the interest prohibition.

The FCA has also reduced the stablecoin issuance operational-risk capital K-factor from 2% to 1% (in PS26/12), and removed UK-issued qualifying stablecoins from the restricted mass-market investment category (PS26/13). These complementary measures, combined with PS26/10, send a clear signal: the UK intends to be open for stablecoin business, provided firms meet the standards.

What Issuers Should Do Now

The FCA's authorisation gateway opens on 30 September 2026 and closes on 28 February 2027. Firms that submit a valid application during this window may continue operating under a saving provision if their application remains undetermined when the regime commences. Those that apply late will not receive this benefit. Existing Money Laundering Regulations registrations will not convert automatically into FSMA authorisation.

The practical takeaway is straightforward: the rules are final, the timeline is tight, and the application forms demand substantial supporting evidence. Issuers need to map their activities against the new Cryptoassets sourcebook, prepare their backing asset and custody documentation, and begin building their authorisation applications now. The UK has laid out its stablecoin endgame. The question is whether firms are ready to play.