- FCA explores regulating crypto trading, staking, DeFi, and credit use to protect UK consumers.
- UK aims for full crypto regulatory framework by 2026, blending innovation with stronger oversight.
- Public input sought to shape rules for stablecoins, lending, and decentralized finance under FCA scope.
The UK’s Financial Conduct Authority (FCA) has taken one more step towards a more inclusive framework for the country’s crypto space. The agency recently called for feedback from the public and industry stakeholders on how crypto-related activities should be regulated in the United Kingdom, with a discussion paper released this week. This move is part larger move towards introducing more open crypto laws by 2026. Here are the details.
What the FCA Is Looking At
The FCA’s discussion paper is focused on several areas of the crypto industry, including trading platforms, intermediaries, lending and borrowing, staking, as well as decentralized finance. So far, the regulator is asking firms, individuals, academics, and other stakeholders for their opinions on how best to regulate these activities.
One area of interest in particular is the growing use of credit to purchase crypto assets. The FCA wants opinions on whether this trend might be risky for consumers, and whether it should put new restrictions in place.
According to David Geale, Executive Director of Payments and Digital Finance at the FCA, building a balanced framework is important because “Crypto is a growing industry”. The industry is largely unregulated, and the FCA wants to create a crypto regime that gives firms the clarity they need to build safely. It wants to do this while keeping the market’s integrity intact and protecting consumers. Geale stated that the ultimate aim is to support the UK’s long-term crypto growth by ensuring a balanced and well-structured regulatory approach.
A New Approach to Regulation
This request for input comes after a draft legislative proposal, released by the UK Treasury earlier this week. If this bill is passed, the new framework will bring specific crypto activities directly under the FCA’s oversight. The UK has taken a step-by-step approach to regulating the crypto sector.
Interestingly, since introducing anti-money laundering controls in 2020, the government has expanded its reach to include a ban on crypto derivatives for retail customers in 2021. This came before it added crypto assets to its financial promotions rules in 2023.
This time around, the focus is on activities like stablecoin issuance, trading, custody, and DeFi. In total, a full implementation of the new regime is expected by 2026.
Balancing Innovation With Oversight
Industry experts see this new consultation move from the FCA as a promising sign. This blend of openness and regulation shows that the FCA intends to put the right factors in place between 2025 and 2030. It intends to support smarter regulation, drive economic growth, help consumers make better financial choices, and tackle financial crime in one fell swoop.
The UK is looking to align more closely with the US’s progressive crypto stance, stepping back from the EU’s more conservative approach. According to UK Chancellor Rachel Reeves, the UK needs international cooperation to become a world leader in digital assets.
