The Financial Conduct Authority (FCA) has today set out its formal proposals for regulating the UK’s burgeoning cryptoasset market, marking a crucial step towards establishing a legislative framework.
The consultation paper details a comprehensive suite of regulatory requirements, designed to overlay the market with principles currently applied in traditional finance—a philosophy championed by City Minister Lucy Rigby, who has stated that the regime, anticipated for the latter half of 2027, will be “proportionate and fair” and instrumental in helping the UK “lead the world in digital asset adoption”.
The FCA’s proposals arrive just one day after HM Treasury laid the final legislation—the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025—before Parliament. This foundational law formally brings core cryptoasset activities into the regulatory perimeter and is the basis upon which the FCA’s detailed rulebook is being constructed.
These documents are the next significant milestone in the FCA’s detailed crypto roadmap, which builds on earlier work involving stablecoins, cryptoasset custody, and high-level conduct standards.
In its announcement, the FCA emphasised that the aim is to create an “open, sustainable and competitive crypto market that people can trust.” The regulator stressed that its approach mandates that anyone investing in crypto should do so “with their eyes open,” acknowledging that regulation cannot eliminate all inherent risk.
David Geale, executive director for payments and digital finance at the FCA, said: “Regulation is coming – and we want to get it right. We’ve listened to feedback, and now we’re setting out our proposals for the UK’s crypto regime.
“Our goal is to have a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us finalise these rules.”
The new proposals extend the regulatory perimeter significantly, addressing several critical facets of the digital asset landscape. A key focus is Market Abuse, where the FCA is proposing robust measures to prevent manipulation and insider dealing, mirroring rules in established capital markets.
To enhance transparency, the regulator is establishing clear standards for Admissions and Disclosures, setting rules for the listing of cryptoassets and mandating what firms must communicate to investors prior to investment. This is paired with new standards for Cryptoasset Trading Platforms, ensuring exchanges meet rigorous standards for reliability and safety.
The consultation also introduces rules specifically targeting complex products, including Staking and Lending/Borrowing. Crucially, the papers address the specific application to UK issuers of stablecoins, confirming that these issuers will not be able to pass on interest from their own backing assets to holders. The FCA is, however, considering mechanisms for how further financial incentives could potentially be shared with holders when UK-issued stablecoins are used.
A pivotal and challenging consultation point relates to Decentralised Finance (DeFi). The FCA is asking whether the regulatory apparatus for traditional finance should be extended to the disintermediated functions (trading, lending, borrowing) of DeFi. Finally, to ensure market resilience, the regulator is imposing Prudential Requirements, mandating financial safeguards on firms to ensure they hold sufficient capital buffers to manage risk effectively.
The FCA confirmed it will consult further in the coming months on applying the Consumer Duty and other consumer protection matters to the sector, including its approach to financial promotions — areas currently only partially regulated.
To facilitate the industry’s transition, the regulator noted it offers extensive support for firms seeking registration under the Money Laundering Regulations 2017, including pre-application meetings, webinars, and in-person events designed to help compliance teams meet the FCA’s expectations.
The FCA reminded the public that, while it continues to build this framework ahead of the October 2027 regime launch, the crypto market remains largely unregulated in the UK, save for controls on financial promotions and financial crime.
The consultation period will remain open until 12 February 2026. For more information, head to the FCA’s website.
