PS26/12: A Prudential Regime for Cryptoasset Firms

On 30 June 2026, the FCA published a suite of policy statements as part of its Cryptoasset Roadmap, setting out the final rules for the UK's new cryptoasset regime. Firms carrying on, or planning to carry on, regulated cryptoasset activities in the UK will need to assess how these rules apply to their business. With implementation dates starting in October 2027 (with some requirements deferred until January 2028), firms should now assess and, where necessary, adapt their operating models, policies and governance arrangements to meet the new requirements.

This article considers the final prudential framework for regulated cryptoasset firms set out by the FCA in PS26/12, covering own funds composition and requirements (including capital K-factors), liquid asset requirements, the overall risk assessment process, and public disclosure obligations.

Own funds composition

The FCA is proceeding with the proposals consulted on in CP25/42. Under CRYPTOPRU, own funds are structured as three tiers of capital instruments:

• Common Equity Tier 1 (CET1) capital instruments
• Additional Tier 1 (AT1) capital instruments
• Tier 2 (T2) capital instruments

The FCA highlights how the deduction requirement applies to holdings of cryptoassets in the final rules and how it interacts with the requirement to deduct intangible assets:

• Deduction of intangible assets (COREPRU 3.3.23): If a cryptoasset is classified as an intangible asset under applicable accounting standards, it will be deducted from CET1 capital. Intangible asset deduction also extends to the net position in any qualifying cryptoasset that is either (i) not traded on a UK-recognised qualified cryptoasset trading platform (QCATP), or (ii) held in the trading book but incapable of being valued in accordance with the prudent valuation requirements in Article 105 of the UK Capital Requirements Regulation.
• Deduction of own and connected qualifying cryptoassets (COREPRU 3.3.39–3.3.40): A firm must deduct from regulatory capital any direct, indirect, or synthetic holding of a qualifying cryptoasset issued by, or whose supply is controlled by: (i) the firm itself; (ii) a member of the same group; (iii) a controller, shareholder, or member of the firm; (iv) a director, other officer, or employee of the firm or of any group member; or (v) a close relative of a person falling within (iii) or (iv). This requirement does not apply to CASS 16 stablecoins, nor where the full value of the holding has already been deducted under another rule within COREPRU 3.3.

Own funds requirement

Permanent minimum requirements (PMR)

The final rules proceed as consulted. The PMR varies by activity, ranging from £75,000 to £750,000:

• Dealing in qualifying cryptoassets as principal: £750,000
• Issuing a qualifying stablecoin: £350,000
• Safeguarding cryptoassets: £150,000
• Arranging qualifying cryptoasset staking: £150,000
• Operating a qualifying CATP: £150,000
• Dealing in qualifying cryptoassets as agent: £75,000
• Arranging deals in qualifying cryptoassets: £75,000

Fixed overheads requirements (FOR)

The FCA rejected arguments that the FOR should be calculated on cryptoasset activity alone, noting that the FOR is intended as a proxy for whole-firm wind-down costs. It also declined to differentiate the FOR treatment between CRYPTOPRU firms and investment firms, and rejected alternative metrics, such as average total expenses or redemption wind-down costs, for UK stablecoin issuers.

The dual test for a material FOR increase is retained: a 30% increase in projected relevant annual expenditure, or a £2 million increase in the FOR, whichever is lower. On gas fees, the FCA confirmed these are treated as comparable to brokerage fees: firms may deduct 100% of gas fees passed on to customers and 80% of any other gas fees.

Operational risk K-factors

• Qualifying stablecoins in issuance (K-SII) (CRYPTOPRU 4.4)
  • The K-SII coefficient has been halved from 2% to 1%. The FCA determined that risk mitigants embedded in the stablecoin issuance policy statement (PS26/10), such as the requirement to maintain full 1:1 backing of qualifying stablecoins, statutory trust over the backing asset pool and safeguarding rules in CASS 16, substantially reduce the residual operational risk that K-SII was designed to capture.
• Qualifying cryptoassets safeguarded (K-RCS) (CRYPTOPRU 4.5)
  • The K-QCS K-factor has been renamed K-RCS (K-factor for cryptoassets safeguarded) to reflect its expanded scope following the inclusion of specified investment cryptoassets. Firms holding specified investment cryptoassets must disapply K-ASA under MIFIDPRU and use K-RCS instead. The coefficient remains 0.04% of average assets safeguarded, consistent with K-ASA in MIFIDPRU.
• Clients’ cryptoassets staked (K-CCS) (CRYPTOPRU 4.6.1)
  • As consulted on, K-CCS applies to firms arranging qualifying cryptoasset staking on behalf of clients. The capital charge is 0.04% of average clients' cryptoassets staked, representing the value of client cryptoassets being staked.
• Client cryptoasset orders (K-CCO) (CRYPTOPRU 4.7)
  • Reflecting the money-like characteristics of stablecoins, the FCA has amended the definition of “cryptoasset order” to exclude orders consisting solely of UK-issued qualifying stablecoins.
• Cryptoasset trading flow (K-CTF) (CRYPTOPRU 4.8)
  • As consulted on, K-CTF applies to firms trading cryptoassets in their own name. The capital charge is 0.1% of average cryptoasset trading flow, being the total value of buy and sell orders executed in the firm's own name.

Exposure risk K-factors

• Net cryptoasset position (K-NCP) (CRYPTOPRU 4.9)
  • The FCA has amended its final rules to confirm explicitly that qualifying cryptoassets used to pay operating expenses need not be recorded in the trading book.
  • More broadly, the K-NCP framework has been substantially simplified: a single 40% position risk adjustment applies to each qualifying cryptoasset's net position, replacing the former Category A / Category B tiered approach. UK stablecoins are exempt; non-UK stablecoins attract the 40% charge. The FCA also removed the provision requiring firms to recalculate the K-NCP requirement before executing any trade.
• Cryptoasset counterparty default (K-CCD) (CRYPTOPRU 4.10)
  • The volatility adjustments under K-CCD have been updated. A 40% volatility adjustment applies to qualifying cryptoassets that are admitted to a UK QCATP and held in the trading book – this mirrors the 40% single position risk adjustment used under K-NCP. The same 40% adjustment applies to non-UK stablecoins. However, a 100% adjustment applies where collateral received comprises cryptoassets that would be deducted from capital (i.e. illiquid or otherwise unreliable assets), meaning such collateral is treated as having no value.
  • The 83.33% retail risk factor remains unchanged. It reflects the protection for retail clients as set out in CRYPTO 9.7.1: on default, a retail client's liability is capped at the market value of the collateral the firm holds, with no recourse against any shortfall.
• Concentration risk (K-CON) (CRYPTOPRU 5.1)
  • The K-CON framework is largely unchanged from the consultation. It applies to any firm with qualifying cryptoasset trading book positions, operating by integrating crypto exposures into the existing MIFIDPRU 5 concentration risk framework. Where a firm's combined exposures – including K-CCD transactions and net positions in cryptoassets issued or controlled by a client – exceed the soft limit, a K-CON capital charge is triggered. Hard limits are assessed separately under MIFIDPRU 5.9.

Liquid asset requirements

The Basic Liquid Assets Requirement (BLAR) and Issuer Liquid Asset Requirement (ILAR) are implemented as consulted:

• BLAR: The FCA confirmed that tokenised forms of core liquid assets (e.g. units or shares in a short-term MMF) may count towards the BLAR where they follow the principles set out by the joint FCA-BoE Call for Input on the future of tokenisation. However, the FCA also highlights that UK-issued qualifying stablecoins are not currently eligible to meet the BLAR.
• ILAR: The final rules set out that there is no specific minimum FX risk capital requirement for UK stablecoin issuers; any relevant FX risk should be assessed as part of the firm's overall risk assessment.

Overall risk assessment

• Cryptoasset firms must conduct an ongoing overall risk assessment to identify, monitor, and mitigate all material risks, including during wind-down.
• The final rules clarify the following:
  • Stress testing: Firms must design their own severe but realistic stress scenarios. Valuation haircuts may apply to assets under stress, but risks already captured by K-factors should not be double-counted.
  • Proportionality: The depth of the assessment should match the potential for harm the firm's activities could cause and not simply its size.
  • Group risks: A CRYPTOPRU firm in a wider group must account for group risks in its overall risk assessment, regardless of whether other group members are regulated. Relevant categories include direct and indirect financial exposures to group members and risks from shared reputation, clients, or control frameworks.
• The FCA also published guidance consultation GC26/4 and GC26/5, through which it is consulting on non-Handbook guidance relevant to the overall risk assessment process under COREPRU 7 and CRYPTOPRU 7.

Public disclosure — Two changes from CP25/42

• The FCA made two targeted changes to the public disclosure framework:
  • Removing the requirement to disclose threshold requirements from each firm’s overall risk assessment, including additional own funds or liquid assets held to address group risk.
  • Exempting firms whose own funds requirement is set by the permanent minimum capital requirement from detailed disclosure requirements.

Next steps

With the first implementation deadline of October 2027 approaching, firms should now be working out how they fit within the new regulatory perimeter and what they need to do to comply. We are continuing to follow developments under the FCA’s Cryptoasset Roadmap and would be happy to talk through what PS26/12 means for your business.