The UK’s Financial Conduct Authority (FCA) has launched a consultation on new minimum standards for crypto firms. The regulator aims to apply rules from traditional finance to promote a well-regulated sector.
While the FCA intends to strengthen consumer safeguards and market integrity with these proposals, the UK’s overall regulatory approach has been criticized as slow, restrictive, and disjointed.
SponsoredFCA Seeks Crypto Feedback
The UK’s financial watchdog, the FCA, is seeking public feedback on a new set of proposed minimum standards for cryptocurrency companies to tighten its grip on the crypto sector.
The proposals in the consultation paper CP25/25 aim to apply many of the same rules from traditional finance to crypto firms. The regulations especially focus on operational resilience and effective systems to combat financial crime.
These measures will aim to help UK companies compete on the global stage. Recognizing the crypto market’s unique features, the FCA is also starting a discussion on applying a new principle to ensure firms operate in their customers’ best interests.
“We want to develop a sustainable and competitive crypto sector – balancing innovation, market integrity and trust. Our proposals won’t remove the risks of investing in crypto, but they will help firms meet common standards so consumers have a better idea of what to expect,” said David Geale, the FCA’s executive director of payments and digital finance, in a press release.
The FCA set an October 15 deadline for feedback on the discussion paper and a November 12 deadline for the consultation paper.
SponsoredHowever, critics have consistently criticized the UK’s overall regulatory approach as muddled and overly restrictive, even as this consultation marks a step toward creating necessary safeguards for the crypto sector.
Critiques of Existing UK Crypto Regulation
Many in the crypto community believe the UK’s legislative progress is too slow, causing businesses to relocate offshore.
A regulatory strategy of enforcing rules through action rather than clear guidance has led to a significant “debanking“ problem. Wary of the FCA’s standards, some traditional financial institutions have severed ties with crypto firms.
A key point of contention is the FCA’s principle of applying the same level of regulation to similar risks. The regulator has been accused of broadly classifying all digital assets as high-risk speculative investments, ignoring their fundamental differences.
Additionally, the UK’s tax system is a source of frustration. The incoming Cryptoasset Reporting Framework (CARF), which takes effect in January 2026, will require detailed transaction reporting.
While intended to combat tax evasion, critics argue the framework is burdensome for traders and raises privacy concerns. Meanwhile, the significantly reduced tax-free allowance for capital gains pulls more small-scale investors into the tax net.
The result of the FCA’s most recent consultation will influence whether the UK can move past its weakened reputation.
