The FCA‘s final cryptoasset rules halve the capital charge that applies to stablecoin issuance. is this a signal the regulator wants volume to build, and argues the harder question for a bank is not whether stablecoins become a payment rail but whether it can carry that volume on the risk infrastructure it already runs.
Dan Holmes of Feedzai on the FCA’s halved stablecoin capital charge, and why banks that run crypto on a separate stack will end up carrying the risk.
Feedzai works in financial risk management and fraud prevention. The Fintech Times put five written questions to Holmes on what the rules change, what trust on a crypto rail actually requires, and how fraud risk shifts once a settled transfer cannot be recalled.
1. The FCA has halved the stablecoin capital charge in its final crypto rules. What does that signal about how the regulator now sees crypto banking?
It signals that stablecoins are no longer being treated as a fringe asset class. They’re being pushed towards being regulated as day-to-day money, forming the conversation about what currency looks like over the next decade.
The capital coefficient is important because it scaled with issuance. At 2 per cent, growth carried a rising cost. Halving it to 1 per cent lowers the cost and entry, and puts the UK in a competitive position relative to its global peers.
More broadly this is calibrated for acceleration as it signals the FCA wants volume to build. So the question for banks isn’t whether stablecoins become a meaningful payment rail. It’s whether they can handle that volume through the same risk infrastructure they already run, or whether they end up building something separate to cope with it. The firms treating this as another payment type will absorb the growth whereas the ones treating it as a side project will carry the long term risk as data and therefore decisions become disconnected.
2. You have said the key to scaling crypto banking is trust. In practice, what does building that trust require, and where do firms most often fall short?
Trust here is about whether the controls consumers already take for granted on current rails exist on the new ones. On a GBP faster payment for example, a customer has real-time transaction monitoring behind the scenes, identity verification at onboarding and step-up, fraud detection that intervenes in real-time before money moves, and liability cover if something goes wrong. Most people don’t think about any of it but they know it exists which gives them confidence and assurance. If a consumer moves to a crypto rail and those things are weaker or absent, the incentive to switch will not be strong enough. Faster settlements/payments and lower costs don’t compensate for the sense that if you get defrauded, you’re on your own.
3. How does fraud risk change as regulated firms move further into stablecoins and crypto services?
Change can be summarised into the following three groups, focused on irreversibility, speed, and scam migration.
- A traditional payment can be recalled; a settled on-chain transfer generally cannot. That moves the control from detective to preventive. The decision has to be right at the point of the transaction, because there are very limited recovery mechanisms afterwards.
- Speed and the fact that settlement in seconds compresses the intervention window to almost nothing. Real-time decisioning stops being a preference.
- Scams such as investment and romance scams already push victims toward crypto as the cash-out mechanism. As regulated firms begin to offer these services directly, those typologies move inside the perimeter and the banks carry the customer relationship and the exposure at both ends.
4. What should a bank or payments firm prioritise first if it wants to offer crypto services under the new framework?
The customer view across on-ramp and off-ramp should be a core focus, closing the gaps that exist today. Most firms can see the fiat side or the digital side, not both as a single customer. That gap is where risk concentrates as fraudsters exploit them. Crypto activity is often an informative signal about fiat activity, and vice versa. If those sit in separate systems, you are monitoring risk with blindspots.
5. Looking ahead to the capital requirements coming into force, what will separate the firms that scale crypto banking from those that stall?
The main constraints will be operational desire and smart investment. Banks that scale will treat crypto as another payment type available to their customers within existing risk infrastructure: one customer view, one control framework, one set of resolution etc. Firms that stall will run it as a separate business with a separate stack, and find every new product multiplies compliance overhead rather than reusing both the tech and the prior risk learnings that have occurred on other channels.
