FCA proposes adapting existing rules to bring crypto firms under full UK oversight, final framework due 2026

The UK's Financial Conduct Authority set out proposals to bring crypto firms fully into its regulatory framework, promising a regime that reflects traditional financial rules while adjusting them to the specific risks and features of the digital asset market.

In a consultation paper released Wednesday, the watchdog said that while the proposals mirror many requirements already applied to other financial firms — including operational resilience, senior management accountability, strong systems and controls, and financial crime safeguards — the new crypto standards will be "proportionate." The FCA aims to protect consumers, reduce financial crime, and support growth, while ensuring UK firms remain competitive internationally.

The agency's guiding principle is "same risk, same regulatory outcome," but it acknowledged that crypto's technology and business models require adjustments. For example, operational resilience requirements — including cyber-attack and outage safeguards — will apply in full, while governance, systems, and controls will be aligned with its Senior Managers and Certification Regime. Crypto firms could typically face standards similar to those for consumer credit providers rather than banks, reflecting their lower systemic risk profile in the regulator's view.

The consultation also opens discussion on whether the FCA's flagship Consumer Duty — which requires firms to deliver good outcomes for customers — should extend to crypto markets. Furthermore, the regulator is seeking views on whether consumers should be able to escalate complaints to the Financial Ombudsman Service.

Meanwhile, high-level standards, including the FCA's Principles for Businesses, will apply to crypto firms with limited carve-outs. The regulator proposes that principles such as integrity, skill and care, and treating customers fairly would not apply to trades conducted directly between professional members on crypto trading platforms, similar to existing rules for multilateral trading venues in traditional finance. Protections for retail investors would remain in place, however.

The regulator emphasized that its proposals "won't remove the risks of investing in crypto" but will ensure firms meet clear minimum standards on crime prevention, resilience, and governance. "We want to develop a sustainable and competitive crypto sector — balancing innovation, market integrity and trust," FCA Executive Director of Payments and Digital Finance David Geale said in a statement. 

The Financial Times, which first reported on the consultation, noted that some cooling-off rights may also not apply to crypto transactions because of inherent volatility, though the FCA's paper frames these as areas still under discussion rather than settled exemptions. 

The proposals follow HM Treasury's draft legislation published in April. Feedback is due in October and November, with final rules scheduled to be released in 2026 after further industry consultations on activity-specific requirements.

Deepening crypto collaboration between the UK and the US

For the past five years, UK-based crypto firms have been required to register with the FCA to comply with anti-money laundering, counter-terrorism, and know-your-customer compliance. The regulator's current remit is limited to financial promotions and preventing financial crime.

Last year, the government unveiled plans for a full UK crypto regulatory framework, while the U.S. has since taken a more crypto-friendly approach under President Donald Trump, increasing pressure on Britain to respond.

On Monday, the FT reported that the UK Chancellor Rachel Reeves and U.S. Treasury Secretary Scott Bessent plan for the two countries to work more closely together on cryptocurrency oversight. The collaboration was discussed at a meeting with representatives from the Bank of America, Barclays, Circle, Citi, Coinbase, and Ripple in London.

Last week, industry groups urged the British government to include stablecoins and tokenization as a "core strand" of the UK-US Tech Bridge ahead of President Trump's second state visit on Wednesday.