The UK’s financial regulatory authority is currently soliciting public input regarding the extent to which its established rules should be applied to the rapidly evolving cryptocurrency landscape. This consultation represents a significant move in the government’s initiative to incorporate digital assets into a structured regulatory framework.
Expanding the FCA’s Reach
The Financial Conduct Authority (FCA) has initiated a consultation paper aimed at assessing how current regulations in its handbook can be adapted for companies engaging in regulated crypto asset activities. This initiative coincides with HM Treasury’s efforts to draft new legislation that will create a comprehensive framework for the cryptocurrency sector.
Current Regulatory Limitations
At this time, the FCA’s oversight of cryptocurrencies is primarily confined to monitoring financial promotions and enforcing anti-money laundering measures. However, the regulator is now looking to expand its scope to include aspects such as corporate governance, operational resilience, controls against financial crimes, and standards related to environmental, social, and governance factors.
Consumer Duty and Conduct Regulations
The consultation also explores how cryptocurrency firms can align with the Consumer Duty, which mandates that financial service providers ensure positive outcomes for retail clients. Other noteworthy topics in the discussion include the Conduct of Business Sourcebook, rules for product governance, and access to the Financial Ombudsman Service.
New Authorization Requirements
Under the proposed changes, companies will be required to obtain FCA authorization prior to engaging in regulated crypto asset activities within the UK. The regulator emphasizes that this requirement will enhance standards and increase consumer protection across the market.
Building Trust Through Oversight
This consultation underscores the FCA’s objective to strike a balance between fostering innovation and maintaining market integrity. By applying established regulatory standards to cryptocurrency firms, the FCA aims to cultivate a more resilient environment for digital assets while tackling risks associated with financial crimes and business failures.
Stakeholder Impact
The implications of these proposals will extend to a broad array of stakeholders, including cryptocurrency companies, industry associations, auditors, financial advisors, consumer advocates, policymakers, and academic experts.
Upcoming Deadlines for Feedback
The FCA is encouraging feedback on the discussion chapters of the consultation paper by October 15, 2025, and responses to the complete proposals by November 12, 2025. The feedback received will be instrumental in shaping the regulatory framework for crypto assets once HM Treasury’s legislation is enacted.
Recent Developments in Crypto Access
Earlier this year, the FCA announced plans to lift its ban on retail access to cryptocurrency-backed exchange-traded notes (cETNs) beginning in October, following a consultation initiated in June. Retail investors will be permitted to trade cETNs, provided these products are listed on UK-recognized investment exchanges. The FCA stipulates that companies offering these products must adhere to financial promotion regulations, ensuring that all client communications are clear, precise, and free from misleading information. Additionally, investment incentives must be appropriate and not exert undue pressure on retail investors.
