Thistle Initiatives Manager, William Lee, recently presented a thought-provoking webinar about the role of stablecoins in remittance, alongside Oliver Calma, Founder and CEO of BCRemit.
The webinar made clear the ease with which stablecoins can be integrated into payment flows to facilitate near-real-time, 24/7 cross-border settlement across the world, something not as efficiently achievable with fiat currencies. Despite the clear benefits of adopting stablecoins for payments firms, there are also regulatory compliance challenges firms should consider, which William explained expertly.
The Current Regime and Looking Ahead
Currently, firms are only expected to adhere to the AML-led regime framework, ensure the fitness and propriety of key individuals and have robust systems and controls.
Firms currently using stablecoins as a means of payment who are already registered under the MLRs will need to apply for FSMA authorisation to provide products and services involving stablecoins from 30th September 2026.
However, going forward, firms will be expected to align with more traditional finance firms. The three key uplift areas are prudential management, safeguarding and management of client assets, as well as strong governance of outsourcing arrangements.
Outsourcing Challenges
William pointed towards the operational and compliance challenges stemming from the strong governance of outsourced providers. Given the heightened focus on outsourcing, firms should undertake a detailed review of third‑party dependencies, documenting risk assessments, contingency planning and exit strategies for critical providers, including stablecoin issuers, custodians and technology partners. Where services are provided within a group, intragroup arrangements should be formalised and supported by clear oversight structures.
Prudential Management
Firms should also assess whether their current governance, risk management and operational frameworks are scalable to a prudential regulatory regime. This includes stress‑testing financial resources, reviewing client assets and safeguarding arrangements, and ensuring senior management has clearly defined responsibilities and escalation routes.
Safeguarding Client Assets
Safeguarding of client assets will be a central pillar of the forthcoming stablecoin regime, reflecting the FCA’s objective to ensure that customers’ assets remain protected. Firms that safeguard qualifying cryptoassets, including stablecoins, will be expected to clearly segregate client assets from their own, maintain accurate records and reconciliations, and ensure that clients retain clear legal rights to their assets at all times.
More broadly, firms will need to demonstrate that safeguarding arrangements are operationally robust, legally enforceable and supported by appropriate controls, governance and oversight. The FCA has been clear that safeguarding is not a purely technical exercise; firms must be able to evidence how their arrangements would operate in practice, including in the event of insolvency, system failure or third‑party disruption, with the overarching objective of minimising the risk of loss or delay to customers’ assets.
The FSMA Application
Considering this year will be the first time the FCA authorises stablecoin firms under FSMA, we can expect their standards to be extremely high during the authorisation process. Firms should provide clear documentation throughout, ensuring that all documents are aligned and demonstrate clear governance and ownership, including lines of escalation. However, firms should not attempt to over-promise in their application as we expect the firm to question the viability of procedural documentation, where they suspect firms will not be able to meet the standards they expect. This is why firms should ensure all documentation is commercially viable, not just compliant.
When applications for authorisation open, firms will be assessed in strict order of receipt, but poor submissions will not be advantaged. Thistle recommends using the FCA’s pre-application support service (PASS) in advance of submitting an application. This will allow firms to start a dialogue with the FCA and better prepare for the authorisation process.
Meet the Expert
William Lee, Manager 
William has joined our Payment Services Consulting team as a Manager. He brings experience from Revolut’s Regulatory Affairs team and his previous role as Policy Advisor at UK Finance, where he worked on financial policy for digital assets and payments.
He has led industry working groups, engaged with regulators, and written on emerging trends in payments and innovation. William is passionate about supporting the UK fintech ecosystem and promoting a secure, competitive financial services sector.