Stablecoin issuance and cryptoasset custody

Abstract

In response to the Financial Conduct Authority’s (FCA) Consultation Paper CP14/24 on strengthening custody and safeguarding rules for cryptoasset firms, we make the following recommendations:
• A clear regulatory environment and a firm government stance on stablecoin regulation can positively contribute to the long-term viability of stablecoins, making their use safer for consumers.
• Specific regulations for stablecoins will help build consumer trust and support the retail adoption of stablecoins by UK consumers over the next two years.
• To enable transparency, regulators should mandate the segregation of client assets from firm assets to prevent misappropriation or loss in the event of bankruptcy.
• Conducting regular independent audits and providing full disclosure of reserves can enhance the survivability of stablecoin pegs.
• Stablecoin structural attributes and technological characteristics are key drivers of survivability, with factors such as the peg mechanism, type of peg, and issuer solvency playing a central role.
• We recommend employing the Stablecoin Survivability Assessment Framework (Labouré & Yarovaya, 2025) for a comprehensive assessment of stablecoin resilience and to reduce the risk of de-pegging. This framework evaluates three key dimensions: (i) structural attributes; (ii) regulatory and institutional factors; and (iii) market and adoption factors

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Identifiers

ORCID for Larisa Yarovaya: orcid.org/0000-0002-9638-2917

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