What your custody platform needs to fund before authorisation
Tokenisation and the new UK regime · Part 4 of 6
The prudential rules set a minimum. The firm's own risk assessment may set a higher figure. The funding plan has to keep both in place from authorisation onwards. These are three separate questions, and a founder needs an answer to each.
Palvinder Gill, Principal, Insight Regulatory Consulting Limited and Founder of cryptopru.com UK position checked on 7 October 2026.
Capital follows permissions, so this article assumes the permission analysis in Part 2 is done. Its example is a standalone FCA-authorised firm that safeguards client assets under article 9N and has no other relevant permissions or K-factors. PRA-authorised persons are outside the definition of a CRYPTOPRU firm (PS26/12, Chapter 2 response). Existing investment firms are covered at the end. The rules are final (PS26/12; instrument FCA 2026/45) and apply from 25 October 2027.
Question 1: what the formula requires
A firm must hold own funds at all times at least equal to its own funds requirement (COREPRU 4.1.1R). That requirement is the highest of three amounts (COREPRU 4.1.2R):
The permanent minimum requirement (PMR), set by permission. It is £150,000 for safeguarding. Where a firm has several permissions, the highest applicable figure applies (CRYPTOPRU 4.2.1R).
The fixed overheads requirement (FOR). This is one quarter of the firm's relevant expenditure for the preceding year. Relevant expenditure is total expenditure less specified deductions, plus fixed expenses that third parties incur on the firm's behalf. It is not simply an accounting line for fixed costs (COREPRU 4.3.1R to 4.3.5R). A firm in business for less than a year must use the relevant expenditure in the projections for its first 12 months' trading that it submitted with its application (COREPRU 4.3.10R). A projected increase of 30% or more, or one that would raise the FOR by £2 million or more, requires an immediate recalculation (COREPRU 4.3.6R).
The K-factor requirement. For a custodian this is K-RCS: 0.04% of the average value of client assets safeguarded (CRYPTOPRU 4.5.1R). The average covers nine months, excludes the most recent three, and is recalculated monthly (CRYPTOPRU 4.5.5R to 4.5.6R). A new firm uses a modified calculation (CRYPTOPRU 4.11.1R).
Running example (fictional, illustrative, not a legal determination). Platform P has £1.2 million of relevant expenditure and safeguards £200 million of assets on average. Its PMR is £150,000, its FOR is £300,000 and its K-RCS is £80,000, so its own funds requirement is £300,000. In this example the FOR and K-RCS are equal at £750 million of average assets, and above that figure K-RCS is the larger.
Question 2: what the firm's own assessment says it needs
The firm must also run an overall risk assessment (ORA). The ORA covers the harms the business could cause and sizes the own funds needed to keep operating through stress and to wind down in an orderly way (COREPRU 7.2.1R; CRYPTOPRU 7.3.2G(3)). The wind-down amount cannot be lower than the FOR (CRYPTOPRU 7.2.6R(2)(a)). The firm must hold the higher of the own funds requirement and the ORA figure (COREPRU 7.2.5R(2)). At least 56% must be common equity tier 1 capital and at least 75% tier 1 capital (CRYPTOPRU 7.3.3R). The FCA finalised its guidance on running the ORA on 30 September 2026: FG26/9 covers COREPRU 7 and FG26/10 covers CRYPTOPRU 7. The guidance explains how the FCA expects firms to comply; the rules themselves remain the binding requirement.
Liquidity is measured separately. The basic liquid assets requirement is one third of the FOR plus 1.6% of any guarantees to clients (COREPRU 6.2.1R), which is £100,000 for Platform P. The liquid assets threshold then adds the higher of two amounts: the firm's assessed liquidity need for ongoing operation under stress, based on a 90-day forecast, and its assessed wind-down liquidity need to the extent that it exceeds the basic requirement (COREPRU 7.2.5R(3); CRYPTOPRU 7.4.5G(3)). FG26/10 sets out this structure for a stablecoin issuer, which also adds an issuer requirement (FG26/10, pp. 22 to 23); Platform P has no issuer requirement. If P's stressed ongoing need were a hypothetical £150,000 and its wind-down need were no more than £250,000, its threshold would be £250,000. Own funds and liquid assets are measured on different sides of the balance sheet. They are not necessarily separate pots of cash, but the funding plan must show that both are met.
Question 3: how the funding plan keeps them in place
Eligible own funds are not the same as cash raised. Deductions reduce own funds (COREPRU 3), forecast losses erode them, and only eligible instruments count. A funding bridge should therefore run from capital raised, through deductions and losses, to eligible own funds, month by month. The appropriate resources threshold condition applies from authorisation (COND 2.4). If own funds or liquid assets fall below their thresholds, the firm must notify the FCA immediately (SUP 15.3.1R(1); CRYPTOPRU 7.3.4G). The rules set no numerical early-warning level. Each firm sets its own levels and recovery actions (CRYPTOPRU 7.2.3R).
Operational events drive these numbers. Suppose a provider failure delays the return of client assets. The ORA should ask what extra staffing, legal and technology costs would arise and how long the firm would have to fund them. Parts 3 and 6 cover the custody and supplier sides of that scenario.
For existing investment firms, a firm that is also a MIFIDPRU investment firm runs its ICARA instead of the ORA chapters (COREPRU 7.1.1R; CRYPTOPRU 7.1.2R). The interaction does not stop there. RSIC amounts already counted in K-ASA must not be counted again in K-RCS (CRYPTOPRU 4.5.3R), and the firm's SNI or non-SNI status (MIFIDPRU 1.2) needs to be checked explicitly. The standalone example above is not the complete calculation for such a firm.
Practical judgement (the author's view, not an FCA position). In the example, the cost base sets the capital figure, not the assets held. That will not be true of every platform. For a new firm, however, the FOR comes from the first-year projections in its application (COREPRU 4.3.10R), so the business plan and the capital plan should be built from the same assumptions, not reconciled afterwards.
Deciding how much to raise, and when
The finance lead should prepare one reconciled model linking the permission list, relevant expenditure, the safeguarded-asset forecast, eligible own funds and liquidity. It should show base and downside cases, the month with the lowest headroom, committed funding dates and wind-down costs.
The finance and operations leads should cost at least one operational stress, such as a provider failure that delays asset return, and feed it into the ORA.
The board should approve the ORA, the early-warning levels and the action to take if funding is late or costs rise (CRYPTOPRU 7.2.3R; 7.5.1R to 7.5.2R).
In an existing investment firm, compliance and finance should map the interaction with MIFIDPRU, including SNI or non-SNI status and the K-ASA and K-RCS overlap.
The Capital Number on cryptopru.com calculates an indicative PMR, FOR, K-factor requirement and liquidity floor from a few aggregate inputs. It is not a substitute for the firm's own assessment.
Key takeaways
Own funds must at all times cover the highest of the PMR, the FOR and the K-factor requirement. The firm's own assessment can set a higher figure.
Liquidity is a separate requirement, and eligible own funds are not the same as cash raised. The funding bridge must show both requirements met in every month.
Existing MIFIDPRU firms need to work through the interaction with MIFIDPRU, including the K-ASA overlap. The standalone example is not their complete calculation.
Sources
FCA PS26/12 and instrument FCA 2026/45 (COREPRU and CRYPTOPRU), June 2026.
FCA Handbook: COND 2.4; SUP 15.3.1R; MIFIDPRU 1.2.
This is general information, not legal, tax or investment advice.
Next: Part 5, Preparing a coherent FCA cryptoasset application
Palvinder Gill is Principal of Insight Regulatory Consulting Limited and founder of cryptopru.com, a free toolkit for firms preparing FCA cryptoasset applications, to which this article refers.
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