FCA Handbook - CASS 16.7 Acknowledgement letters

You are viewing CASS 16.7 Acknowledgement letters as it appeared on 25/10/2027. The current version of CASS 16.7 Acknowledgement letters was last updated on 25/10/2027.

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CASS 16.7 Acknowledgement letters

Purpose

The main purposes of an acknowledgement letter are:

(1) to put third parties on notice that the holders of a qualifying stablecoin in respect of which the firm is the qualifying stablecoin issuer have an interest in the money or assets that have been deposited with, allowed to be held by, or invested with that person;
(2) to ensure that a backing funds account or backing assets account:
1. (a) has been opened in the correct form, in accordance with and in compliance with the rules in CASS 16; and
2. (b) is distinguished from any account containing money or assets that are not part of the backing asset pool, including from any account containing money or assets which belong to the firm; and
(3) to ensure that a third party understands and agrees that it will not have any recourse or right against money or assets standing to the credit of a backing funds account or backing assets account in respect of any liability of the firm to the third party (or a person connected to the third party).

Requirement for, and content of, backing asset pool acknowledgement letters

(1) For each appointed third party providing one or more backing funds accounts or backing assets accounts, a firm must complete and sign an acknowledgement letter, clearly identifying the account or accounts, and send it to the third party with which the relevant account or accounts are, or will be, opened, requesting the third party to acknowledge and agree to the terms of the letter by countersigning it and returning it to the firm.
(2) A firm must not hold any money or assets in a backing funds account or backing assets account unless it has received a duly countersigned acknowledgement letter from the person with which the account is held, and the letter has not been inappropriately redrafted (see CASS 16.7.7R).

CASS 16.7.2R:

(1) applies separately in relation to each qualifying stablecoin product; and
(2) does not apply to backing funds accounts provided by the Bank of England.

Backing asset pool acknowledgement letters template

In drafting an acknowledgement letter, a firm must use the template in CASS 16 Annex 1.

When completing an acknowledgement letter, a firm:

(1) must not amend any of the acknowledgement letter fixed text;
(2) subject to (3), must ensure the acknowledgement letter variable text is removed, included or amended as appropriate; and
(3) must not amend any of the acknowledgement letter variable text in a way that would alter or otherwise change the meaning of the acknowledgement letter fixed text.

CASS 16 Annex 2 contains guidance on using the template for acknowledgement letters, including guidance on when and how a firm should amend the acknowledgement letter variable text that is in square brackets.

Countersignature of backing asset pool acknowledgement letters

(1) If, on countersigning and returning the acknowledgement letter to a firm, a third party has also made amendments to:
1. (a) any of the acknowledgement letter fixed text; or
2. (b) any of the acknowledgement letter variable text in a way that would alter or otherwise change the meaning of the acknowledgement letter fixed text,
  the acknowledgement letter will have been inappropriately redrafted and no longer comply with CASS 16.7.5R.
(2) Amendments made to the acknowledgement letter variable text in the acknowledgement letter returned to a firm by a third party will not have the result that the letter has been inappropriately redrafted if those amendments:
1. (a) do not affect the meaning of the acknowledgement letter fixed text;
2. (b) have been specifically agreed with the firm; and
3. (c) do not cause the acknowledgement letter to be inaccurate.

A firm must use reasonable endeavours to ensure that any individual who has countersigned an acknowledgement letter that has been returned by a third party to the firm was authorised to countersign the letter on behalf of that third party.

A firm must retain each countersigned acknowledgement letter it receives from the date of receipt until the expiry of a period of 5 years starting on the date on which the last account to which the acknowledgement letter relates is closed.

A firm must also retain any other documentation or evidence it believes is necessary to demonstrate that it has complied with each of the applicable requirements in this section (such as any evidence it has obtained to ensure that the individual who has countersigned an acknowledgement letter that has been returned to the firm was authorised to do so).

Review and replacement of backing asset pool acknowledgement letters

A firm must periodically (at least annually, and whenever it becomes aware that something referred to in an acknowledgement letter has changed) review each of its countersigned acknowledgement letters to ensure that they remain accurate.

Whenever a firm finds that a countersigned acknowledgement letter contains an inaccuracy, the firm must promptly draw up a new replacement acknowledgement letter and ensure that the new acknowledgement letter is duly countersigned and returned by the relevant third party.

Under CASS 16.7.12R, a firm must obtain a replacement acknowledgement letter whenever:

(1) there has been a change in any of the parties’ names or addresses or a change in any of the details of the relevant account(s) as set out in the letter; or
(2) it becomes aware of an error or misspelling in the letter.

If a firm’s backing funds account or backing assets account is transferred to another third party, other than the Bank of England, the firm must:

(1) promptly draw up and send out a new acknowledgement letter under CASS 16.7.2R; and
(2) ensure that the new acknowledgement letter is duly countersigned and returned by the relevant third party.

Point In Time

25/10/2027