CP25/15: Capital and Liquidity Requirements for Cryptoasset Firms

Overview

The Financial Conduct Authority (FCA) published CP25/15 in May 2025 which sets out proposed prudential rules for certain cryptoasset activities under the future UK FSMA cryptoasset regime. CP25/15 focuses on capital and liquidity requirements for firms seeking authorisation to issue qualifying stablecoins and/or safeguard qualifying cryptoassets (including qualifying stablecoins).

CP25/15 forms part of the FCA’s wider programme to establish a comprehensive UK regulatory regime for cryptoassets. The FCA’s stated aims include reducing regulatory uncertainty, improving consumer and market confidence, and supporting innovation and competition by setting clear, proportionate standards for firms operating in the UK.

The FCA aims to foster growth by developing a regulatory framework for cryptoassets that is proportionate, predictable, and aligned with international standards. This approach is designed to encourage innovation and investment in the UK, enabling firms based here to compete globally. In assessing capital and liquidity requirements, the FCA considers its proposals to be broadly in line with, or more competitive than, regimes such as the EU’s MiCA, and those in Singapore and Hong Kong.

The proposed expansion of the cryptoasset regulatory regime is underpinned by two statutory objectives:

• Supporting competitiveness and growth: by creating a clear, predictable regime that enables responsible innovation and investment.

• Protecting consumers and market integrity: by requiring appropriate safeguarding, governance, and financial resilience, and by reducing the risk of disorderly firm failure.

The proposed prudential regime will apply to:

• Firms seeking authorisation to issue qualifying stablecoins. 

• Firms seeking authorisation to safeguard qualifying cryptoassets (including qualifying stablecoins). 

• Firms that will be subject to CRYPTOPRU and (where applicable) firms that are already subject to MIFIDPRU and will also carry on regulated cryptoasset activities (dual‑regulated firms).

These firms listed above will be subject to proposed prudential rules and are referred to as “CRYPTOPRU Firms”. 

Guidance on what constitutes a qualifying cryptoasset can be found in CP 25/14, with our breakdown available [here]. In summary, qualifying cryptoassets include qualifying stablecoins that maintain their value against a single fiat currency by the issuer.

CP25/15 sits alongside CP25/14 which also makes proposals for stablecoin issuance and cryptoasset custody. 

Prudential Framework Structure

The FCA proposes an integrated prudential architecture, comprising a core prudential sourcebook (“COREPRU”) setting out cross‑sector requirements, supplemented by sector‑specific sourcebooks. 

Regulated cryptoasset firms will be the first cohort supervised under COREPRU, with other firms transitioning over time. Additionally, the sector-specific CRYPTOPRU sourcebook will apply to all firms providing cryptoasset services. Regulated cryptoasset firms would be the first cohort to be supervised under COREPRU, with other sectors expected to transition over time.

OFAR

The Overall Financial Adequacy Rule (OFAR) would require a CRYPTOPRU firm to maintain, at all times, financial resources that are adequate in amount and quality for the nature, scale and complexity of its business. 

The FCA proposes that a firm’s minimum own funds requirement (OFR) will be the higher of: Permanent Minimum Requirement (PMR), Fixed Overheads Requirement (FOR), and K-factor Requirement (KFR).

1. Permanent Minimum Requirement (PMR)

A CRYPTOPRU Firm should, at all times, operate with a minimum level of own funds based on the cryptoasset services and activities it has permission to undertake, which is its PMR.

Proposed PMR levels (by activity):

• PMR of £350,000 applies to issuing qualifying stablecoin; and

• PMR of £150,000 applies to safeguarding of qualifying cryptoassets.

Where a firm undertakes a combination of regulated crypto activities, the higher PMR would apply.

2. Fixed Overheads Requirement (FOR)

The FOR is intended to ensure a minimum capital buffer to support an orderly wind‑down or exit from the market.

The FCA proposes that a CRYPTOPRU Firm's FOR will be equal to one quarter of its relevant expenditure in the previous year, calculated from figures in its most recent audited annual financial statements.

To calculate relevant expenditure for the FOR, a CRYPTOPRU Firm will first need to determine its total expenditure before it has distributed any profits, then may deduct certain other expenses (to the extent those items have been included in expenditure) if they are fully discretionary and have not already been treated as a distribution of profits.

3. K-Factor Requirement (KFR)

The K-factor capital requirements are either activity or exposure based, with which K-factors applying to an individual CRYPTOPRU Firm depending on the activities it undertakes, with the amount of each requirement growing with the scale of business undertaken.

K-SII: Stablecoin Issuance

K-SII is the KFR for the amount of capital qualifying stablecoin issuers must hold against the risks from issuing a qualifying stablecoin.

K-SII would be measured and calculated as 2% of the average qualifying stablecoin in issuance (SII). To calculate the average SII a firm must: take the total amount of SII at the end of each business day for the previous 9 months, exclude the values for the most recent 3 months, calculate the arithmetic mean of daily values for the remaining 6 months, and K-SII is then calculated on the first business day of each calendar month.

K-QCS: Cryptoasset Custody

K-QCS is the proposed KFR to capture the risks from safeguarding qualifying cryptoassets for clients (i.e. when acting as custodians).

The FCA is proposing that K-QCS be calculated as 0.04% of a cryptoasset custodian's average QCS. Where a firm has appointed a third party to safeguard qualifying cryptoassets, or has itself been appointed by a third party to safeguard qualifying cryptoassets, the firm must include the value of those qualifying cryptoassets in the measurement of its QCS. The FCA does not consider this to be a 'double counting' of the assets, as there is a potential risk of harm from a qualifying cryptoasset custodian's direct safeguarding responsibilities.

Capital Requirements

The FCA proposes to align the definition and composition of own funds with the MIFIDPRU framework (CET1, AT1 and Tier 2), including standard deductions and adjustments.

Under the proposals, a CRYPTOPRU firm would be required to meet the following own funds composition thresholds:

• CET1 must be equal to or greater than 56% of the firm's OFR;

• the sum of CET1 and AT1 must be equal to or greater than 75% of the firm's OFR; and 

• own funds must be equal to or greater than 100% of the firm's OFR.

Standard deductions include intangible assets, deferred tax assets, investments in capital instruments of financial sector entities, and direct holdings of own capital instruments. A crypto-specific deduction applies to cryptoassets held by the firm that it has issued itself, or are issued by a connected party, or where the firm controls the supply. However, regulated stablecoins backed in line with regulatory requirements need not be deducted.

Liquidity Requirements

The FCA proposes two liquidity components: (i) a Basic Liquid Assets Requirement (BLAR) applicable to all CRYPTOPRU firms, and (ii) an Issuer Liquid Assets Requirement (ILAR) applicable only to qualifying stablecoin issuers. These buffers are intended to support firms in meeting liabilities as they fall due and to fund the initial stages of an orderly wind‑down where required.

Basic Liquid Assets Requirement (BLAR)

BLAR is an amount equal to one third of a firm's fixed overheads requirement and applies to all CRYPTOPRU Firms. The FCA proposes to require CRYPTOPRU Firms to hold an amount of liquid assets that is at least equal to the sum of: one third of the amount of its fixed overheads requirement, and 1.6% of the total amount of any guarantees provided to clients. This is to ensure that CRYPTOPRU Firms always have a minimum stock of liquid assets to fund the initial stages of a wind-down process, if wind-down becomes necessary.

Eligible Assets include coins and banknotes; short-term deposits at a UK bank; assets representing claims on or guaranteed by the UK government or the Bank of England (for example UK gilts and Treasury bonds); and units or shares in a short-term regulated money market fund, or in a comparable third country fund.

Issuer Liquid Asset Requirement (ILAR)

ILAR applies to qualifying stablecoin issuers and is intended to ensure sufficient on-demand liquidity to address potential shortfalls arising from market movements in backing assets. It requires issuers to calculate what level of cash deposits are needed to account for price volatility in the backing asset pool so firms can promptly top up the backing pool if there is a shortfall.

The FCA proposes an ILAR which must be met with on demand deposits. To calculate the ILAR, firms will need to establish the residual maturity, the state issuer and the coupon for each government debt security. Firms will then need to identify the relevant charge based on this information from the table in CRYPTOPRU and apply this to the current total value of each position in the backing pool.

Concentration Risk

Concentration risk is the potential for loss if a firm is overly exposed to one or more counterparties or type of asset.

Firms should monitor and control all relevant sources of concentration risk, including: 

• assets (for example, trade debts); 

• off-balance sheet items; 

• the location of client money and custody assets;

• the location of the firm's own cash deposits; 

• the sources of earnings; and 

• when a CRYPTOPRU Firm is issuing qualifying stablecoin, the backing assets held for the purpose of maintaining that coin's value.

CRYPTOPRU Firms that issue qualifying stablecoin should carefully consider the concentration risk in the backing asset pool. Where concentration risk exceeds the firm’s articulated risk tolerance, the firm would be expected to take timely action to reduce exposures (including within the backing asset pool). Separately, the FCA’s proposals on safeguarding and custody (including ring‑fencing arrangements for backing assets) are addressed in the related consultation materials (see our CP25/14 article).

Dual-Regulated Firms

For firms that would be subject to both CRYPTOPRU and MIFIDPRU, the FCA proposes that:

• PMR applies the highest requirement across both sourcebooks; 

• FOR remains consistent across sourcebooks; and 

• KFR requires the sum total of all K-factors across both sourcebooks.

Timeline and Next Steps

The FCA has announced that the authorisation gateway will open on 30 September 2026, with the application period running to 28 February 2027. 

The FCA has also indicated that a pre‑application support service (PASS) will open in July 2026. The new cryptoasset regime commences on 25 October 2027, firms that apply within the gateway window are expected to benefit from transitional arrangements while their applications are determined. 

Final rules and related Policy Statements are expected later this year.

This article forms part of our series exploring the UK’s new crypto‑asset regime. You can read related content from us by clicking the below links:

• The Digital Asset Ecosystem: A potted history and some terminology 

• DP25/1: Staking as a Service, Affordability Checks and Decentralisation Audits

• CP25/14: Stablecoin Issuance and Cryptoasset Custody

• CP25/28: A deeper dive on fund tokenisation in the UK 

• The Bank of England’s proposals for Sterling-Denominated Systemic Stablecoins 

• CP25/40 – CP25/42: FCA Publishes Three Major Cryptoasset Consultation Papers 

• CP25/25 and CP26/4: FCA Consults on the Handbook's Application to Regulated Cryptoassets 

The information provided in this article is intended for general information purposes only and does not constitute legal advice. Firms should seek specific legal and regulatory advice based on their individual circumstances. For more information or to discuss anything in this article, please contact our Digital Assets team by emailing [email protected].

You can also subscribe to our monthly financial services regulation update for ongoing insights on cryptoasset regulation and other regulatory developments here.