The UK's Financial Conduct Authority has introduced proposed crypto regulations that may broaden the definition of custody, potentially affecting platforms and software providers who do not consider themselves custodians. The FCA's Cryptoasset Perimeter Guidance, published recently, outlines several technical complexities for firms handling client crypto assets. A key provision is the 24-hour threshold for custody, where any firm holding client assets for more than a day during trade settlement may be classified as a regulated custodian, requiring a full safeguarding license.
Validators and node operators must also exercise caution, as providing 'added value' features such as user dashboards or yield tools may necessitate seeking approval for arranging staking. The FCA aims to strengthen consumer protections and support fair, transparent markets with these new regulations. Notably, the guidelines address 'shadow custody' and stablecoin issuance, emphasizing that only UK-based issuers managing the entire lifecycle of stablecoins will be considered lawful. The FCA is seeking feedback on these proposals until June 3, 2026, and plans to publish finalized rules and guidance later this year.
A five-month application window will be available for firms to transition to the new approval regime under the Financial Services and Markets Act, with those missing the deadline facing potential penalties and closures.