The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

On 28 May 2025, the UK’s Financial Conduct Authority (FCA) published Consultation Papers CP25/14 and CP25/15, setting out a proposed regulatory framework for stablecoins focused on issuance, custody, and prudential requirements. With the UK still developing its framework, Singapore’s framework offers a helpful comparative view, having finalised key requirements for regulating stablecoin-related activities in August 2023. The Monetary Authority of Singapore (MAS) regime focuses on fiat-backed single-currency stablecoins (SCS) issued in Singapore and introduces requirements across issuance, reserve composition, redemption, prudential, and safeguarding.

MAS’s framework offers a helpful reference point for the FCA as it calibrates its own. While not directly transferable, specific features such as the approach to redemption timelines, reserve asset strictness, and custodian requirements could provide useful inputs for UK implementation. At a broader level, these cross-jurisdictional insights also support long-term ambitions for global regulatory harmonisation and interoperability, particularly as stablecoins evolve into cross-border instruments.

For firms and regulators alike, these contrasting models highlight the key trade-offs involved, between flexibility and certainty, speed and operational realism, innovation and risk containment. As the FCA finalises its framework, MAS’s experience may offer useful lessons on how tighter guardrails can build market trust, while leaving room for interoperability and future convergence across global standards.

Reserve asset composition

A cornerstone of stablecoin regulation lies in how reserve assets are composed, managed, and disclosed. The FCA proposes a structured approach requiring stablecoin issuers to maintain backing assets equal to the total value of stablecoins in circulation. Of these, at least five percent must be held in on-demand deposits to provide immediate liquidity. The remainder is to be held in high-quality, short-term government debt or deposits held at commercial banks, defined as “core backing assets,” with the option to include a share of “expanded backing assets” such as longer-dated government bonds, constant net asset value (CNAV) money market funds, or assets held under repurchase agreements, provided additional controls are in place. These controls include a Backing Asset Composition Ratio (BACR), a tool designed to cap and monitor exposures to riskier instruments.

MAS prescribes a narrower range of permissible reserve assets. Stablecoin reserves must be held entirely in cash, cash equivalents, or debt securities with a residual maturity of no more than three months, issued by the Singapore government, its central bank, or supranational entities rated AA- or higher. This stands in contrast to the FCA’s broader model, which permits a more diversified mix of reserve asset, and the proposed approach offers issuers more flexibility in reserve management, which may better suit different business models and support the commercial viability of stablecoin issuance. 

Redemption mechanics

The FCA’s CP25/14 places strong emphasis on the ability of holders to redeem stablecoins at par value, with redemption to be processed by issuers within one business day of receiving a valid request. This obligation applies to both retail and non-retail clients and is designed to support confidence and liquidity in daily usage. Also, the proposed redemption timeline aligns with existing UK e-money regulations. Issuers must establish and publish clear redemption policies, including any applicable fees, and ensure redemption occurs in fiat currency without unnecessary barriers.

On the other hand, MAS adopts a longer redemption window, requiring issuers of regulated stablecoins to fulfil redemption requests within five business days. As with the FCA, MAS requires that redemptions occur at par value and in fiat, but allows a broader operational window.

For firms, this difference underscores the operational expectations set by regulators: the FCA’s one-day timeline may require more robust liquidity and process readiness from day one but aligns with existing UK regulatory requirements for e-money, while MAS’s five-day window offers more leeway but may be perceived as less aligned with other existing payments regulations.

Asset segregation and safeguarding

Under CP25/14, the FCA proposes that client cryptoassets, including stablecoins held in custody, must be held on trust. These assets must be ringfenced from the custodian’s own holdings and can be held in either individually segregated or omnibus wallets, provided the firm can clearly identify each client’s entitlement. Issuers must also segregate the reserve assets backing stablecoins from their proprietary assets and appoint independent custodians. The FCA permits the use of third-party custodians, including overseas entities that are not FCA-authorised, provided the firm conducts appropriate due diligence and obtains trust acknowledgment letters. This provides firms with a degree of operational flexibility, though it introduces additional oversight responsibilities. It also highlights the legal uncertainty stemming from current industry practices, particularly the lack of third-party verification on distributed ledgers, and points to past insolvency cases (such as Cryptopia and Gatecoin) where contractual terms failed to fully protect customers. To mitigate these risks, firms will need to maintain accurate records and obtain trust acknowledgement letters from any third-party custodians.

MAS takes a similar stance. It requires all reserve assets backing stablecoins to be held in segregated accounts, separate from the issuer’s own assets. While MAS initially proposed that only Singapore-licensed custodians be used, it ultimately allowed for non-SGD-denominated reserve assets to be held with overseas custodians, provided they meet a minimum credit rating of A– and maintain a Singapore branch regulated by MAS.

As jurisdictions around the world shape their regulatory responses to stablecoins, both the UK and Singapore are signalling clear intent to bring structure, safeguards, and confidence to this emerging market. While the FCA’s proposed regime introduces flexibility and trust-based protections aligned with existing financial services frameworks, MAS offers a conservative and tightly defined approach, prioritising liquidity and legal certainty.

For issuers, the choice of jurisdiction may hinge on regulatory clarity, operational flexibility, or the ability to scale across borders. For regulators, the divergence highlights a broader challenge: if stablecoins are to fulfil their potential as a cross-border payment instrument, greater alignment on core safeguards, like redemption, reserves, and custody, may become increasingly important.