The UK's Financial Conduct Authority has introduced new crypto regulations that could significantly expand the definition of custody, potentially affecting platforms and software providers that do not consider themselves custodians. The FCA's Cryptoasset Perimeter Guidance, published recently, outlines several technical traps for firms handling clients' crypto assets. According to the rules, any firm or crypto platform holding client assets for more than 24 hours during trade settlement will likely be classified as a regulated custodian, requiring a full safeguarding license. Validators and node operators must also exercise caution, as they will lose their exemption if they provide 'added value' features such as user dashboards or yield tools, and must seek approval for arranging staking.
The FCA has stated that its new perimeter will strengthen consumer protections and support fair, transparent, and orderly markets as the sector matures. The regulator has also addressed the issue of 'shadow custody,' making it clear that if a crypto service provider can theoretically override a client's authority, it is considered a custodian, even if it guarantees it will never exert that power.
For stablecoin issuers, the rules are equally straightforward, requiring them to be established in the UK and manage the entire lifecycle of the stablecoin. The FCA is seeking views on these proposals until June 3, 2026, and intends to publish finalized rules in the summer, followed by the final perimeter guidance in September. All entities providing crypto services will be required to transition from the current money-laundering registration system to a stricter approval regime under the UK's Financial Services and Markets Act.
Firms that fail to apply during the five-month application window, which runs from September 30, 2026, to February 28, 2027, risk facing fines, suspensions, and permanent closures.