The UK’s financial regulatory body is actively seeking public input regarding the extent to which its current regulations should be adapted to encompass the rapidly evolving cryptocurrency industry. This consultation represents another significant move in the government’s initiative to impose a formal regulatory framework on digital assets.
### Broadening the FCA’s Authority
The Financial Conduct Authority (FCA) has issued a consultation paper aimed at assessing how its existing regulatory guidelines could apply to businesses engaged in regulated cryptocurrency activities. This initiative aligns with HM Treasury’s efforts to formulate new legislation tailored for the crypto sector.
Currently, the FCA’s oversight of cryptocurrencies is confined to matters of financial promotions and anti-money laundering (AML) regulations. AML refers to the processes by which illicit funds are concealed to appear legitimate. This is a critical issue across various industries, particularly in financial services, where a significant volume of illegally obtained money is laundered. The FCA is now looking to expand its oversight to include governance, operational resilience, financial crime controls, and standards related to environmental, social, and governance (ESG) issues.
The consultation also aims to gather opinions on how cryptocurrency firms can adhere to the Consumer Duty, which mandates that financial service providers prioritize favorable outcomes for retail clients. Additional topics for discussion include the Conduct of Business Sourcebook, product governance regulations, and access to the Financial Ombudsman Service.
### Establishing Trust Through Regulation
Under the proposed changes, companies will be required to obtain FCA authorization prior to engaging in regulated cryptocurrency activities within the UK. The regulator believes this requirement will enhance standards and improve consumer protection.
The consultation underscores the FCA’s intention to reconcile the need for innovation with the necessity for market integrity. By applying established regulatory standards to cryptocurrency firms, the FCA aims to foster a more sustainable environment for digital assets while mitigating risks associated with financial crime and business failures.
These proposals will have implications for a diverse array of stakeholders, including cryptocurrency companies, industry associations, auditors, advisors, consumer advocates, policymakers, and academics.
### Feedback and Future Regulations
The FCA is inviting public comments on the discussion chapters of its consultation paper by October 15, 2025, with feedback on the complete proposals due by November 12, 2025. The results of this consultation will help shape the regulatory framework for cryptocurrencies once HM Treasury’s legislation is enacted.
Earlier this year, the FCA announced its decision to lift restrictions on retail access to cryptocurrency-backed exchange-traded notes (cETNs), effective from October. This follows 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 has stipulated that firms offering these products must adhere to financial promotion regulations, ensuring that the information provided to clients is transparent, accurate, and free of misleading content. Additionally, any investment incentives must be suitable and must not exert undue pressure on retail investors.
