The UK’s Financial Conduct Authority has revealed its long-anticipated regulatory framework for cryptoassets, a sweeping initiative that will bring trading, custody, issuance, DeFi, and stablecoins under formal oversight by 2026.
This regulatory expansion extends the Financial Services and Markets Act 2000 to encompass cryptoassets, with HM Treasury publishing draft legislation on April 29, 2025, that mirrors the EU’s Markets in Crypto-Assets Regulation framework.
Firms seeking to operate in the UK’s crypto landscape face a stringent authorization process that has so far approved only 51 of 368 applications submitted since 2020—a conversion rate that has industry participants raising eyebrows and, occasionally, voices.
The FCA maintains that such thoroughness is essential for market integrity, though critics suggest it borders on excessive caution that may stifle innovation rather than nurture it. The FCA is actively seeking industry feedback on the Admissions and Disclosures and Market Abuse Regime for Cryptoassets to improve the regulatory approach.
Consumer protection sits prominently at the regulatory table, with the FCA considering a prohibition on credit card purchases of cryptoassets—a measure that acknowledges the uncomfortable reality that speculative investments and revolving credit make for a potentially toxic financial cocktail. The discussion paper explicitly explores restrictions on credit for cryptocurrency purchases as part of its broader consumer protection strategy.
Mandatory risk warnings and transparent marketing requirements further underscore the regulator’s emphasis on investor safeguards.
Stablecoins, those quasi-conventional bridges between traditional and digital finance, receive special attention under the proposed framework.
UK-based issuers must adhere to specific stability protocols—presumably because “stable” coins should actually remain, well, stable.
The FCA has opened its discussion paper for public responses until June 13, with formal consultations anticipated in 2025.
This participatory approach invites stakeholders to shape regulations addressing credit card usage, DeFi oversight, and compliance requirements—matters that particularly concern smaller market participants facing disproportionate regulatory burdens. The framework will likely introduce tiered KYC systems where verification requirements correspond to transaction volumes, balancing compliance needs with user experience.
As the UK positions itself as a competitive crypto hub with clear rules, the challenge remains balancing protective oversight with supporting innovation.
The cryptoasset industry, meanwhile, awaits a regulatory framework that might finally transform “wild west” into “mild west”—preferably without sacrificing the dynamism that makes the sector compelling.
