# The UK in 2026–2028: EMI Safeguarding Reform and the FCA–Bank of England Crypto Regime > CASS 15 from 7 May 2026, FSCS £120,000 at banks only, the crypto authorisation window from 30 September 2026 and BoE stablecoin rules — a map of the UK reform. Author: Ksenia Voronova — Lawyer, Family Office (https://wiki.private.law/en/authors/voronova) Last modified: 2026-08-14T13:15:00.000Z Canonical: https://wiki.private.law/en/uk-safeguarding-crypto-regime Topics: banking Jurisdictions: uk Product tags: neobank, compliance, stablecoin, crypto Semantic tags: neobank, compliance, stablecoin, crypto --- ## Two Tracks of One Reform The United Kingdom is rebuilding its financial regulation along two parallel tracks, and both converge in 2026-2028. The first is the protection of client money at EMIs and payment institutions: the FCA is moving safeguarding out of the Electronic Money Regulations 2011 and the Payment Services Regulations 2017 into its own rulebook, with daily reconciliations, a mandatory audit and monthly reporting. The second is the migration of the crypto market from light-touch AML registration into the full FSMA licensing perimeter: from 25 October 2027, trading platforms, custodians, staking services and stablecoin issuers may operate in the UK only with FCA authorisation, while systemic stablecoins additionally fall to the Bank of England. The framework comes from the Financial Services and Markets Act 2023 and the [National Payments Vision](https://www.gov.uk/government/publications/national-payments-vision) of November 2024; the 2026-2028 sequence was fixed by the Payments Forward Plan of 27 February 2026, issued by HM Treasury, the Bank of England, the FCA and the PSR — the latter being folded into the FCA. For a client, the reform answers what happens to money if a provider fails; for a builder — what rules, capital and deadlines stand behind a UK licence for payments, e-money and crypto. ## Why the Tightening: Ipagoo and the 65% Shortfall The FCA laid out its motivation in consultation CP24/20 in September 2024. Among payment firms that became insolvent between early 2018 and mid-2023, the average shortfall in client funds was 65%: for every pound owed to customers, the estate recovered roughly 35 pence. Meanwhile, UK EMIs and payment institutions hold around £5 billion of client money on any given day, and e-money account use grew fivefold across 2017-2022. The legal backdrop was sharpened by the Ipagoo case: in 2022 the Court of Appeal confirmed that the Electronic Money Regulations do not by themselves create a statutory trust over client funds. In an insolvency, the fate of the money depended on the quality of a particular firm's segregation and on the outcome of creditor disputes — a fragile construction for a sector of this size. ## CASS 15 from 7 May 2026: What Your EMI Must Do [Policy statement PS25/12](https://www.fca.org.uk/publications/policy-statements/ps25-12-changes-safeguarding-regime-payments-and-e-money-firms) of 7 August 2025 introduced the interim framework — the supplementary regime, written into the new CASS 15 chapter of the FCA Handbook and in force since 7 May 2026. The core requirements: daily internal and external reconciliations of client funds; a resolution pack from which an administrator can reconstruct within 48 hours where whose money sits; a monthly REP024 regulatory return; and an annual safeguarding audit with results submitted to the FCA — the only exemptions cover payment initiation providers and small firms safeguarding under £100,000. The insurance method is tightened too: at least three months' notice before a policy lapses, with a fallback plan ready. For a builder this is an investment-firm level of operational load: a dedicated CASS process, an auditor, documented analysis of which funds are relevant funds. For a client it means transparency: the regulator now sees monthly where each EMI's client money sits. ## EMI versus Bank: Where Your Pounds Sit The reform does not remove the core distinction: an EMI is not a bank, and FSCS insurance does not extend to it. Since 1 December 2025, [deposit protection at banks has been raised to £120,000](https://www.bankofengland.co.uk/news/2025/november/pra-confirms-fscs-deposit-limit-to-be-increased-to-120000-from-1-december) per depositor, temporary high balances are covered up to £1.4 million for six months, and the investment limit stays at £85,000. Money at an EMI is protected only by safeguarding: segregation on accounts at banks such as [ClearBank](https://wiki.private.law/en/clearbank) and a return procedure in insolvency — net of the administrator's costs and the waiting time. | Question | UK bank | EMI or payment institution | | --- | --- | --- | | FSCS insurance | Up to £120,000 from 1 December 2025; temporary high balances up to £1.4 million for 6 months | None: FSCS does not cover e-money or payment accounts | | What protects the money | Capital and liquidity under PRA supervision, plus the FSCS | Safeguarding only: segregation at a bank or insurance/guarantee | | Failure scenario | FSCS payout, typically within days | Return from the safeguarding pool via an administrator: months and procedural costs | | Interest on balances | Possible | Prohibited on e-money | | Examples | [ClearBank](https://wiki.private.law/en/clearbank), [iFAST Global Bank](https://wiki.private.law/en/ifast-global-bank), Revolut Bank UK | Wise, Payoneer, [Paysend](https://wiki.private.law/en/paysend-avosend) | A practical checklist: - Check the FCA Register to see what you are dealing with: a bank with a deposit licence or an EMI. A "UK account" at Wise, Payoneer or Paysend is e-money without FSCS cover. - Split holdings above £120,000 across FSCS banks — [iFAST Global Bank](https://wiki.private.law/en/ifast-global-bank), for example, opens deposits for non-residents — or move them into money market funds and gilts. - Ask an EMI which bank holds its safeguarding account: that is the key due diligence question, not the brand of the app. How to read the chain — in the guide to [correspondent banking](https://wiki.private.law/en/correspondent-banking-safeguarding). - Separate transit from storage: an EMI for payments and conversions, a bank for balances. ## End-State: the Statutory Trust The FCA's end goal is a "CASS-style" regime: a statutory trust over relevant funds, modelled on client money rules for investment firms. In PS25/12 the regulator deferred exactly that part: banks were not ready to open trust accounts at scale, and firms warned about the cost of rewriting contracts and records. The FCA will return with a fresh consultation after the first full CASS 15 audit cycle, and the calendar is tied to HM Treasury's decision on revoking the PSRs and EMRs — a realistic horizon of 2027 and beyond, with no date set. ## Crypto: from MLR Registration to Full Authorisation FSMA 2023 brought cryptoassets into the regulatory perimeter. HM Treasury published a draft statutory instrument in April 2025, and the FSMA 2000 \(Cryptoassets\) Regulations 2026 were made in February 2026; an amending draft of 21 April 2026 carves UK-issued stablecoins out of the dealing activity and adds exemptions for proprietary trading and market making. The FCA ran its consultations in parallel — from [CP25/14 on stablecoin issuance and custody](https://www.fca.org.uk/publications/consultation-papers/cp25-14-stablecoin-issuance-cryptoasset-custody) and CP25/15 on prudential rules in May 2025 to the finale: [on 30 June 2026 five policy statements landed](https://www.fca.org.uk/publications/policy-statements/cryptoasset-regime) — PS26/9 \(admissions to trading and market abuse\), PS26/10 \(stablecoin issuance\), PS26/11 \(platforms, custody, staking, lending\), PS26/12 \(the prudential regime\) and PS26/13 \(application of the Handbook\). The launch calendar: the application window for existing firms runs from 30 September 2026 to 28 February 2027; those who file keep operating under savings provisions until a decision; the full regime commences on 25 October 2027. The critical detail: MLR registration does not convert automatically — full Part 4A authorisation is required. Custody of client crypto moves into the new CASS 17 chapter with a trust model, and capital is calculated as the highest of a permanent minimum of £75,000-£750,000, one quarter of annual overheads, and K-factors — the stablecoin issuance coefficient was cut from 2% to 1%. Still open are [CP26/4 on the second part of the Handbook](https://www.fca.org.uk/publications/consultation-papers/cp26-4-application-handbook-regulated-cryptoasset-activities-II) and CP26/13 on the perimeter — who needs authorisation at all. ## Stablecoins: Two Tiers — FCA and the Bank of England The model has two tiers. Ordinary issuers are regulated by the FCA under PS26/10: reserves held on statutory trust separately for each coin, redemption at par no later than the next business day, a ban on passing reserve income to holders, an intragroup custodian capped at 20% of the pool, and quarterly disclosures of reserve composition and coins in issue. Systemic stablecoins are the Bank of England's domain. The [consultation of 10 November 2025](https://www.bankofengland.co.uk/news/2025/november/boe-launches-consultation-on-regulating-systemic-stablecoins) proposed holding limits of £20,000 for individuals and £10 million for businesses; after a wave of criticism, the [policy statement of 22 June 2026](https://www.bankofengland.co.uk/news/2026/june/boe-launches-policy-statement-and-draft-rules-on-regulating-systemic-stablecoins) dropped the limits, replacing them with a temporary issuance guardrail of £40 billion per coin. A systemic issuer's reserves: up to 70% in short-term gilts, at least 30% in an unremunerated account at the Bank of England. The Code of Practice consultation runs until 22 September 2026, the final code is expected by end-2026, and the regime operates from 2027. Market context and the comparison with MiCA and the GENIUS Act — in the explainer on [stablecoin types and regulation](https://wiki.private.law/en/stablecoins). ## The Applicant's Calendar to 25 October 2027 - Before 30 September 2026 — a gap analysis against PS26/9-13 and a perimeter check against CP26/13: which activities become regulated. - 30 September 2026 — the application window opens; filing early leaves time for dialogue with the FCA. - 28 February 2027 — the window closes for existing firms: latecomers lose the protection of savings provisions. - 7 May 2026 to spring 2027 — the first CASS 15 audit cycle for EMIs and payment institutions; its results will feed the statutory trust consultation. - 25 October 2027 — the crypto regime commences: operating in the UK perimeter without authorisation ends. The strategic choice is the UK versus the EU: in Europe a stablecoin issuer needs the EMI plus CASP pairing under [MiCA](https://wiki.private.law/en/mica-eu), in the UK a single FCA gate with a higher bar on reserves and capital. The regime comparison sits in the [map of financial licences](https://wiki.private.law/en/fintech-license-map), the client's view of the asset class in [crypto for private wealth](https://wiki.private.law/en/crypto-private-wealth). > 🍓 Money at a UK EMI is protected by segregation, not insurance: the £120,000 FSCS limit works only at banks. CASS 15, in force since 7 May 2026, makes providers more transparent and disciplined, but the statutory trust is deferred to 2027 and beyond. A crypto business needs a plan before 28 February 2027: MLR registration does not convert, and from 25 October 2027 operating in the UK perimeter without FCA authorisation is closed. The client's rule stands: storage at a bank, transit through an EMI, crypto with authorised providers. ## Q/A ### **Is money at a UK EMI protected by FSCS insurance** No. The FSCS covers deposits at banks — up to £120,000 since 1 December 2025. An EMI must segregate client funds under CASS 15, and in an insolvency the money comes back from the safeguarding pool via an administrator — with procedural costs and delay, as Ipagoo and the FCA's 65% shortfall statistic showed. ### **What changed for an EMI client on 7 May 2026** No insurance was added, but provider discipline rose: daily reconciliations, an annual audit, monthly REP024 reporting and a resolution pack for a failure scenario. Both the likelihood of a shortfall and the time to return money should shrink. Still check which bank holds your provider's safeguarding account. ### **A crypto firm holds an FCA MLR registration. Can it keep operating** Until 25 October 2027 — yes. Beyond that, authorisation is required: an existing firm files during the window from 30 September 2026 to 28 February 2027 and keeps operating under savings provisions until a decision. There is no automatic conversion; a firm that does not file winds down its UK activity by the regime's start. ### **Will there be a statutory trust over EMI client money** The FCA confirms the intention but moved it to the end-state: a new consultation is planned after the first CASS 15 audit cycle and depends on HM Treasury revoking the PSRs and EMRs. The realistic horizon is 2027-2028; until then the interim segregation regime under CASS 15 applies. --- ## FAQ ### Is money at a UK EMI protected by FSCS insurance No. The FSCS covers deposits at banks — up to £120,000 since 1 December 2025. An EMI must segregate client funds under CASS 15, and in an insolvency the money comes back from the safeguarding pool via an administrator — with procedural costs and delay, as Ipagoo and the FCA's 65% shortfall statistic showed. ### What changed for an EMI client on 7 May 2026 No insurance was added, but provider discipline rose: daily reconciliations, an annual audit, monthly REP024 reporting and a resolution pack for a failure scenario. Both the likelihood of a shortfall and the time to return money should shrink. Still check which bank holds your provider's safeguarding account. ### Will there be a statutory trust over EMI client money The FCA confirms the intention but moved it to the end-state: a new consultation is planned after the first CASS 15 audit cycle and depends on HM Treasury revoking the PSRs and EMRs. The realistic horizon is 2027-2028; until then the interim segregation regime under CASS 15 applies. --- ## Factual claims - The United Kingdom is rebuilding its financial regulation along two parallel tracks, and both converge in 2026-2028. - The FCA laid out its motivation in consultation CP24/20 in September 2024. - The legal backdrop was sharpened by the Ipagoo case: in 2022 the Court of Appeal confirmed that the Electronic Money Regulations do not by themselves create a statutory trust over client funds. - Policy statement PS25/12 of 7 August 2025 introduced the interim framework — the supplementary regime, written into the new CASS 15 chapter of the FCA Handbook and in force since 7 May 2026. - FSMA 2023 brought cryptoassets into the regulatory perimeter. - The launch calendar: the application window for existing firms runs from 30 September 2026 to 28 February 2027; those who file keep operating under savings provisions until a decision; the full regime commences on 25 October 2027.