The UK’s financial regulatory authority is actively seeking input from the public regarding the extent to which its current regulatory framework should apply to the rapidly evolving cryptocurrency industry. This initiative is part of the government’s broader strategy to establish a structured regulatory environment for digital assets.
### Expanding the FCA’s Reach
The Financial Conduct Authority (FCA) has initiated a consultation process aimed at assessing how its existing regulations can be adapted to encompass businesses engaged in regulated cryptocurrency activities. This development coincides with efforts by HM Treasury to draft new legislation that will establish a comprehensive regulatory framework for the cryptocurrency sector.
Currently, the FCA’s oversight of the crypto market is confined to matters such as financial promotions and anti-money laundering regulations. However, the regulator intends to extend its jurisdiction to include governance, operational resilience, controls against financial crime, as well as environmental, social, and governance (ESG) considerations.
The consultation also seeks to gather opinions on how cryptocurrency firms should adhere to the Consumer Duty, which mandates that financial service providers ensure favorable outcomes for retail clients. Additional topics under consideration include the Conduct of Business Sourcebook, rules for product governance, and access to the Financial Ombudsman Service.
### Building Trust Through Oversight
Under the proposed changes, businesses will be required to secure FCA authorization before engaging in regulated cryptocurrency operations within the UK. The FCA contends that this requirement will elevate industry standards and enhance consumer protection.
This consultation underscores the regulator’s goal of striking a balance between fostering innovation and maintaining market integrity. By applying established regulatory standards to cryptocurrency firms, the FCA aims to cultivate a more stable environment for digital assets while mitigating risks associated with financial crime and corporate failures.
The implications of these proposals are extensive, affecting various stakeholders including cryptocurrency firms, industry organizations, auditors, financial advisors, consumer advocates, policymakers, and academic institutions.
The FCA has invited feedback on the discussion chapters of the consultation paper by October 15, 2025, and comments on the complete proposals are due by November 12, 2025. The feedback received will play a significant role in shaping the regulatory framework for digital assets once HM Treasury’s legislation is implemented.
Earlier this year, the FCA announced plans to lift restrictions on retail access to cryptoasset-backed exchange-traded notes (cETNs) starting in October, following a consultation initiated in June. Retail investors will be permitted to trade cETNs as long as they are listed on investment exchanges recognized in the UK. The FCA emphasized that firms providing these products must adhere to financial promotion regulations, ensuring that information given to clients is clear, accurate, and not misleading. Additionally, investment incentives must be reasonable and not exert undue pressure on retail investors.
