The recent series of blogs, diagrams, and press releases published by the FCA highlight their commitment to creating a safe, competitive, and sustainable crypto market in the UK, balancing innovation with robust consumer protections. Are these measures enough to position the UK as a long-term home for the digital asset industry…or is it too little, too late?
Firstly, let’s have a look at the multitude of development we have seen in the past few days, and how businesses can align strategically to benefit from these developments.
The FCA’s Crypto Vision: Key Developments
1. Rising consumer engagement and regulatory intentions
The FCA’s recent press release highlights the continued rise in cryptoasset ownership among UK adults, with 12% now owning crypto, up from 10% in previous findings and the average value of crypto held by individuals increasing to £1,842. This growth reflects the increasing value and, possibly, the confidence of consumers in the crypto market, and with awareness now at 93%, suggests more people are informed about the market and its potential.
To address this growth responsibly, the FCA has laid out an ambitious roadmap featuring consultations and discussion papers on critical areas, such as market abuse, stablecoins, custody, and prudential aspects. Collaboration with international stakeholders is central to this strategy, signalling a globally cohesive regulatory framework.
2. FCA Crypto Roadmap: a phased regulatory approach
The FCA’s Crypto Roadmap diagram outlines a strategic phased approach:
- Stablecoins: Building on a 2023 discussion paper, the FCA plans a consultation paper in the first and second quarters of 2025 to regulate stablecoins used in novel business models. Importantly, these regulations will remain distinct from the broader payment regulations.
- Trading Platforms, Staking and Prudential Rules: By Q1/Q2 2025, the FCA will consult on trading platform rules, intermediation standards, and staking. Final frameworks will aim for implementation by 2026.
- Market Abuse and Conduct: A separate consultation on market abuse rules is expected in Q3 2025, ensuring clarity and enforcement by the following year.
The aim is for this roadmap to be concluded in a policy statement and finalised by 2026 when gateway readiness and application windows will open before the regimes become operational.
3. Tighter controls on cryptoasset financial promotions and ramp services
New guidance on the FCA’s webpage on cryptoasset financial promotions and fiat-to-crypto ramp services details the new regulations and guidance for payments firms and registered MLR cryptoasset providers that partner with unregistered cryptoasset firms. The FCA highlights risks such as financial crime, unfair competition and consumer harm, emphasising the need for robust due diligence and compliance frameworks. Cryptoasset firms registered under the MLRs, and payment services and e-money firms authorised under the PSRs/EMRs, must take various measures to mitigate risks associated with partnering with unregistered cryptoasset firms.
- Understanding and Compliance: Firms should consider seeking advice to better understand the UK financial promotions regime, particularly section 21 of FSMA, and should assist their partners in becoming compliant with these regulations.
- Due Diligence and Control Frameworks: firms must conduct thorough due diligence on partner firms, engage section 21 approvers to ensure compliance, and implement robust control frameworks to detect and address non-compliance, including geo-blocks and continuous monitoring.
Balancing risks and innovation: The FCA’s strategic goals
The FCA’s Director of payments and digital assets, Matthew Long, discussed in his blog the regulator’s goal of fostering a balanced and collaborative regulatory environment that mitigates risks without stifling innovation. Central to this approach is striking a balance:
- Protecting consumers and market integrity: Regulations will guard against misleading promotions and financial crime, ensuring consumer trust.
- Supporting technological growth: by fostering dialogue with global partners and tailoring regulations to emerging use cases, the FCA aims to maintain the UK’s competitive edge in financial innovation.
Tokenisation Summit and the UK Government’s launch of Digit
Beyond the FCA, the UK government is making waves with initiatives like the Digital Gilt Instrument (DIGIT) pilot, exploring the potential of Distributed Ledger Technology (DLT) in debt issuance, as presented by Tulip Siddiq MP, Economic Secretary to the Treasury and City Minister, HM Treasury at his keynote address at the Tokenisation Summit. The pilot will take place within the Digital Securities Sandbox (DSS), allowing for real transactions in a live environment under regulatory oversight, cementing the UK’s position at the forefront of DLT adoption. These steps are part of a broader strategy to integrate traditional finance with emerging technologies, aiming to keep the UK at the leading edge of financial innovation.
Strategic considerations for crypto firms
The evolving regulatory landscape presents both challenges and opportunities. Firms must adapt proactively to meet the new standards while capitalising on the UK’s ambitions to lead in crypto innovation. Key steps include:
- Investing in compliance: robust control frameworks and due diligence are critical for aligning with the FCA requirements, particularly in financial promotions and partnerships.
- Leveraging expert guidance: staying ahead of regulatory developments demands expertise. Partnering with specialists can ensure compliance and foster strategic growth.
- Seizing opportunities in DLT and Tokenisation: With government initiatives like DIGIT, firms should explore how DLT can enhance their operations and offerings.
The road ahead: a glass half full?
The FCA’s initiatives, coupled with government led innovation, paint a promising picture for the UK’s crypto future. However, the question remains: will the phased approach and timelines enable the UK to outpace global competitors?
With 2026 set as a milestone for operational regimes, the coming years will be critical for determining the UK’s success as a global hub for digital assets. Firms that align with these changes and invest in compliance and innovation are well positioned to thrive.
At fscom, we specialise in helping businesses navigate these complex requirements. Our team of experts can help you stay compliant, competitive and prepared for the future of crypto in the UK. Contact us today to learn how we can support your journey.
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.
