Crypto meets CASS: UK FCA to adapt client asset rules for cryptoassets

As it continues to work on its rulebook for cryptoassets, the Financial Conduct Authority is also considering how existing rules will interact with the incoming regime. In its latest consultation (CP26/8) the FCA proposes amending its client assets sourcebook (CASS) so that it continues to work as intended once crypto activities are regulated. Firms have until 13 April 2026 to respond.

The FCA’s main proposals are:

• Stablecoin backing assets are not client money but must be kept separate: The FCA seeks to clarify that money held in backing funds accounts for stablecoins should not be treated as client money. Where money is held solely to back qualifying stablecoins, CASS 16 applies rather than the CASS 7 client money rules. Money held under CASS 16 cannot be mixed with client money under CASS 7.

• No opt-out for professional clients on crypto. Professional clients can elect out of client money protections for some types of business. The FCA does not intend to make the professional client opt-out provision in CASS 7 available for qualifying cryptoasset activities.

• No DvP exemption for crypto: Money used in delivery versus payment transactions can be exempt from being treated as client money where the transaction is settled using a commercial settlement system. The FCA proposes to disapply this exemption where the delivery obligation relates to a cryptoasset.

• Alternative segregation approach available: Generally firms must segregate client money promptly on receipt into a designated client  bank account. The alternative approach allows a firm to receive client money into its own bank account in limited circumstances. The FCA proposes allowing the alternative approach for client money relating to cryptoasset transactions but only if the relevant conditions, which remain unchanged, are met.

• Money arising from crypto safeguarding is client money: According to the FCA, firms should treat money arising from, or in connection with, the safeguarding of client cryptoassets as client money. Where a third party safeguards client cryptoassets on behalf of a firm, the firm must make sure the third party deposits any money arising from that safeguarding into one of its client bank accounts.

• Scope of mandate requirements: The mandate rules apply where a firm can control a client’s assets, money or liabilities. The FCA proposes clarifying that, where a firm safeguards client cryptoassets under CASS 17, it does not also have to comply with the mandate rules in CASS 8. The mandate rules will apply if a firm has a mandate over a client’s cryptoassets but does not itself safeguard those assets.

These proposals should be read alongside the FCA’s draft rulebook for cryptoassets, including CP25/14 and CP26/4. Firms planning to enter the UK’s crypto regime will need to engage with the CASS rules and determine how they will apply to their activities and their arrangements with third parties.