FCA bundles stablecoins into new crypto regime, regulators and banks demand accountability from social media in the age of fraud & more

Good morning! We hope you had a relaxing weekend.

From the FCA’s proposed stablecoin regime to ESMA’s crackdown on crypto scams and social media finfluencers, this week'd RegTech eXtra offers a kaleidoscope of updates - spotlighting also a record £1.17 billion lost to fraud last year, upcoming insurance reforms, and the evolving role of AI in compliance. Read on to explore.

Regulators advance oversight of stablecoins

The Financial Conduct Authority (FCA) has unveiled plans to regulate stablecoins under a new cryptoasset regime, aiming to bring them within the scope of existing financial rules. The move includes proposals for issuer and custody requirements, marking a major step in the UK’s broader effort to build a regulated digital asset framework. To support this, the FCA has launched a consultation seeking further feedback on its proposed rules for stablecoins and cryptoasset custody, focusing on consumer protection, prudential standards and operational resilience. ✅ The FCA is seeking feedback on these proposals until 31 July 2025, with final rules expected to be published in 2026.

In Asia, Hong Kong has launched a consultation on detailed rules for regulating fiat-referenced stablecoins, following the passage of its stablecoin legislation. The proposed framework includes licensing requirements, reserve management and redemption obligations aimed at safeguarding financial stability and consumer protection.

Meanwhile in the US, the FT columnist Robert Armstrong argues that stablecoins functionally resemble bank deposits and should be regulated as such, framing the US GENIUS Act as a form of “banking-lite” oversight. He warns of systemic risks like run scenarios and questions whether privately issued stablecoins are the right solution for modernising payments.

The new UK Finance Annual Fraud Report 2025: from push payments to global scams, a unified fraud response is required

The UK Finance Annual Fraud Report 2025 reveals that £1.17 billion was stolen through fraud in 2024, with a record 3.31 million cases, despite industry efforts preventing £1.45 billion in attempted fraud. While some scam types like romance fraud declined, sharp rises in investment scams and international fraud underscore the growing need for global collaboration and AI-driven defences. Experts say a ‘systemic’ solution is required as scammers adopt new methods and increase unauthorised losses.

Insurance rules reviewed: FCA proposes proportionality and product oversight reforms

🎧 On June 4, 11.30 am, the FCA is hosting a ✅ webinar on simplifying insurance rules and clarifying fair value assessments. It will provide updates relevant to insurers and insurance innovators navigating evolving UK regulations.

These updates come as part of a broader regulatory push. The FCA’s Consultation Paper CP25/12, published in May 2025, proposes a wide-ranging overhaul of insurance regulation. Key proposals include more flexible product oversight rules, simplified training requirements and clearer distinctions between retail and commercial customers. ✅ As the July 2 consultation deadline approaches, firms are encouraged to review these changes and attend the FCA’s June 4 webinar to better understand the potential impact. More on the proposed reforms to UK insurance regulation here.

Social media under scrutiny as regulators and banks push for accountability in age of finfluencers and fraud

UK bank leaders, including those from Lloyds and HSBC, are calling for social media platforms to share responsibility for rising fraud levels, as a significant share of scams originate on these sites. Under the UK’s Online Safety Act, Ofcom can now fine tech firms that fail to curb such harms. This move demonstrates the growing regulatory focus on digital platforms. 📩 Subscribe to Compliance Corylated to receive the weekly newsletter.

In Europe, the European Securities and Markets Authority ESMA has called on social media companies to take stronger action against unauthorised financial promotions, warning that misleading ads, especially those involving crypto, pose growing risks to retail investors. The regulator urged platforms to enhance content moderation and improve cooperation with national authorities

Regulators are also raising concerns over Gen Z’s growing reliance on LinkedIn and TikTok “finfluencers” for investment advice, warning that unverified content on these platforms can expose young investors to misinformation and financial risk. The trend shows the need for tighter oversight of financial promotions on social media.

In mid-May, Ofcom launched two investigations as part of its enforcement duties under the UK’s Online Safety Act that enables Ofcom to fine social media firms up to 10% of their annual global revenue. Earlier in May, the International Organisation of Securities Commissions (IOSCO) also published its Report on Finfluencers.

Other updates

Regulation highlights

■︎ The Prudential Regulation Authority (PRA) updated its regulatory reporting guidance for regulated firms on 28 May 2025, detailing new expectations for data submissions, including integrated reporting and third-country branch disclosures. The guidance, effective from 1 March 2026, gives firms time to implement tech-enabled changes.

■︎ The Monetary Authority of Singapore (MAS) announced a review of its corporate governance code. This initiative aims to enhance the standards and practices of corporate governance in Singapore, ensuring that they remain robust and aligned with global best practices.

Compliance insights

■︎ This Finextra blog explains why a Target Operating Model (ToM) is essential for effective compliance transformation, helping financial institutions align people, processes, and technology with regulatory objectives. It argues that without a clearly defined ToM, compliance efforts risk becoming fragmented, reactive, and unsustainable.

FinTech, RegTech, AI

■︎ AI is driving a fundamental shift in compliance, transforming it from a reactive obligation into a forward-looking strategy for managing risk. This blog explores how trusted data, regulatory intelligence and responsible AI governance are enabling more resilient and proactive compliance frameworks. 🎧 Listen to the full Podcast here.

■︎ City A.M. explores the rise and recent challenges of Starling Bank, once hailed as a fintech success story, now facing scrutiny over its halted European expansion, leadership exits and questions about its future direction. The article highlights growing doubts about its ability to sustain growth amid increased competition and regulatory pressure.

💬 Quote of the Week

“The growing proliferation of online scams targeting retail investors poses a serious risk to both investors themselves and society at large, with fraudulent actors exploiting digital platforms to advertise unlawful financial services.”

— the European Securities and Markets Authority (ESMA), via Finance Magnates

Stay ahead with the latest updates shaping the financial landscape and beyond.

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