UK Stablecoin Rules Are Final: What the FCA's Two-Tier Regime Means for Stablecoin Accounting and IFRS Compliance

The UK's Financial Conduct Authority has finalised its regulatory framework for stablecoins, and the details matter well beyond legal and compliance teams. For accounting firms, CFOs, and auditors, the rules carry direct consequences for how stablecoin holdings are classified, measured, and disclosed under IFRS, how backing assets are presented on the balance sheet, and how firms document their redemption obligations. The application window opened on 30 September 2026, with the rules coming into force on 25 October 2027, giving firms a defined but limited runway to get their accounting and reporting infrastructure in shape.

How the UK Arrived at These Rules

The FCA did not produce this framework in isolation. It ran what it describes as a world-first Stablecoins Cohort, in which four issuers tested the proposed policy in practice before it was finalised. The sandbox attracted 20 applications in November 2025, which led the FCA to revise its estimate of the future firm population upward from 10 to 25 issuers. That iterative process left clear marks on the final rules.

Key Calibrations from the Cohort Process

Several provisions that were sharpened during the sandbox process will have direct accounting and operational relevance for firms:

• Issuers may hold up to 20% of backing assets in intragroup custody, subject to defined safeguards.
• A 5% operational excess is permitted within the backing pool, providing a buffer that will need to be reflected in how the pool is measured and reported.
• The T+1 redemption clock starts only once the issuer has completed its AML checks and has received the coin being redeemed, so AML obligations no longer compress the redemption window itself.
• Non-time-based rewards to holders are permitted; interest-style returns are not.

Each of these calibrations has an accounting dimension. The 5% operational excess affects how closely the carrying value of the backing pool tracks the par value of outstanding tokens. The intragroup custody allowance introduces related-party disclosure requirements. The prohibition on interest-style returns clarifies the liability classification of tokens in issue.

The Two-Tier Architecture and What It Means for Accounting

The most structurally significant feature of the UK regime is its division of oversight between two regulators, depending on the systemic weight of the stablecoin in question.

Non-Systemic Issuers: FCA-Only Oversight

Stablecoins that have not been designated systemic by HM Treasury sit within the FCA's perimeter. Issuers must hold the backing pool on a statutory trust. At least 5% must be held in on-demand deposits, with the remainder in permitted high-quality liquid assets. Tokens must be redeemable at par within T+1. Issuers must meet ongoing disclosure and safeguarding requirements.

From an IFRS perspective, the statutory trust structure is significant. If the backing pool is held on trust for token holders, it is ring-fenced from the issuer's own assets and liabilities. This affects how the pool is presented in the financial statements: it should not be netted against the token liability, and it will likely require separate disclosure as a restricted or trust asset. Under IFRS 9, the individual instruments within the pool will need to be classified on their own merits, on-demand deposits as amortised cost assets, short-duration government securities potentially at fair value through other comprehensive income depending on the business model test.

The token liability itself, representing the obligation to redeem at par, is a financial liability under IAS 32. Given the par redemption obligation and the prohibition on interest-style returns, it is most likely measured at amortised cost, though firms will need to assess whether any variable features in their specific token structure affect that conclusion. For those working through IFRS crypto assets treatment more broadly, the FCA's explicit par-redemption requirement is a useful anchor: it supports the case that the token does not carry the price-appreciation characteristics of a volatile crypto asset and should be treated as a financial instrument rather than an intangible asset under IAS 38.

Systemic Issuers: Bank of England Steps In

Once HM Treasury designates a stablecoin as systemic, the Bank of England becomes the prudential regulator, working alongside the FCA. The Bank's proposed approach, still under consultation, carries materially heavier requirements: backing would be held as a mix of unremunerated deposits at the Bank itself and short-term UK government debt. The transition from FCA-only to joint oversight would take place over a window of 12 to 36 months.

The accounting implications of systemic designation are considerable. A shift to unremunerated central bank deposits as the primary backing asset changes the yield profile and, depending on volume, could affect the issuer's revenue model and going concern disclosures. The 12-to-36-month transition period is long enough to require phased disclosures under IAS 10 and IAS 37 if designation occurs close to a reporting date. Auditors reviewing going concern assessments for large issuers will need to factor in the possibility of designation and the associated capital and operational costs.

Settlement Asset Recognition and the Regulated Liability Network

The FCA and Bank of England confirmed that stablecoins meeting minimum standards under the new framework can be used as a settlement asset in the UK's Regulated Liability Network. This is practically important for firms that hold or plan to hold stablecoins not as a speculative position but as a functional settlement instrument.

Accounting for Settlement Stablecoins

When a firm holds a qualifying stablecoin as a settlement asset rather than as a held-for-trading position, the classification question under IFRS 9 shifts. A stablecoin used purely for payment settlement, with par redemption contractually guaranteed and no expectation of capital gain, may pass the solely payments of principal and interest test if its contractual cash flows are sufficiently simple. Where that test is not met, which will depend on the specific token's terms, the instrument will be measured at fair value through profit or loss, creating volatility in the income statement even for holdings that never move materially from par.

For those also tracking usdc accounting specifically, USDC's structure under Circle's existing terms, and potentially under a UK-authorised equivalent, would need to be assessed against the FCA's new backing and disclosure requirements to determine whether the IFRS 9 treatment available under the prior regulatory vacuum still holds. Our earlier analysis of the stablecoin accounting considerations following Standard Chartered's USDC integration covers the IFRS classification questions that arise when an institutional bank begins offering stablecoin access, and those questions are now even more pressing given the UK's formalised regulatory perimeter.

The UK versus MiCA: Two Regimes, Two Sets of Books

For firms operating across the UK and the EU, the FCA has itself cautioned that its capital approach is not a like-for-like equivalent of the EU's Markets in Crypto-Assets Regulation. The frameworks share some common ground: both bring issuance inside a regulated perimeter, both require full backing and par redemption, and both prohibit interest-style returns to holders. But the architecture is different.

MiCA is a single legislative rulebook with defined categories for e-money tokens and asset-referenced tokens, and it provides passporting across EU member states. The UK has taken a regulator-led, activity-based route, with a bespoke systemic tier overseen by the central bank. The result is that a stablecoin designed and capitalised for one regime will not automatically satisfy the other. For accounting purposes, that means issuers and integrators operating in both markets may need to maintain parallel compliance structures, with different backing pool compositions, different disclosure formats, and potentially different auditor sign-off requirements for each jurisdiction.

This is not a trivial operational point. Firms that assumed the UK would converge closely with MiCA will need to revisit their legal entity structures, their intercompany arrangements, and their chart of accounts to ensure that the relevant backing assets and token liabilities are correctly attributed to the right regulated entity in each jurisdiction. For further context on how MiCA-driven delistings are already affecting firm-level accounting decisions, see our coverage of Revolut's USDT delisting and the accounting steps firms must take.

Practical Steps for Accounting Firms and CFOs

With the application window open and rules in force from October 2027, the preparation timeline is real. Firms should treat the next twelve months as an accounting and reporting build-out period, not just a legal review exercise.

Immediate Priorities

• Liability classification: Review whether any stablecoins held on the balance sheet qualify as financial liabilities under IAS 32 given the par redemption obligation, and document the conclusion.
• Backing pool segregation: Confirm that the statutory trust structure, once adopted, is reflected correctly in the chart of accounts, with the pool shown as a restricted asset and not netted against the token liability.
• Related-party disclosures: If intragroup custody is used (up to the 20% cap), ensure that the related-party relationship and the terms of the custody arrangement are disclosed under IAS 24.
• IFRS 9 classification review: Assess each instrument in the backing pool against the business model and cash flow characteristics tests. On-demand deposits at a bank are straightforward; short-duration government securities require a more careful analysis depending on how they are managed.
• Operational excess accounting: The 5% permitted operational excess means the backing pool will, by design, exceed the par value of outstanding tokens at all times. Document how this excess is classified and whether it gives rise to any income recognition question.
• Systemic designation monitoring: If the issuer is approaching the threshold at which HM Treasury might designate a stablecoin as systemic, begin preparing the disclosures and capital assessments that joint Bank of England/FCA oversight would require.

FAQs

Source: Elliptic