In the latest step of its regulatory overhaul roadmap, the UK’s financial watchdog has asked for the public’s feedback on its proposed crypto regulations. This request follows the recent publication of a draft legislation to establish a more comprehensive regulatory framework for digital assets.
Financial Watchdog Seeks Public Input
On Friday, the UK FCA published a new Discussion Paper (DP) seeking public input as part of its digital assets’ roadmap, aiming to open a discussion on the features of the upcoming regulatory regime and how crypto assets’ “unique aspects” should be considered.
The financial authority stated it wishes to develop a safe, competitive, and sustainable crypto industry, noting that long-term confidence depends on “clear regulations to promote market integrity and appropriate consumer protection.”
Our aim is to achieve an appropriate degree of consumer protection, enhance market integrity, support effective competition whilst facilitating international competitiveness and encouraging growth as far as reasonably possible. We welcome feedback as to whether the policy proposals achieve an appropriate level.
As such, the Discussion Paper consults on the crypto community’s view on regulations related to trading platforms, intermediaries, staking, lending, borrowing, and decentralized finance. Additionally, it asks for feedback on using credit to purchase digital assets.
A recent Financial Times report alleges that the financial regulator plans to prohibit retail investors from borrowing money for their crypto investments, due to the FCA’s concern about “unsustainable debt, particularly if the value of their crypto asset drops and they were relying on its value to repay”.
The FCA Executive Director of Payments and Digital Finance, David Geale, stated, “Crypto is an area of potential growth for the UK but it has to be done right,” arguing, “To do that we have to provide an appropriate level of protection.”
The regulatory agency solicited feedback from firms, individuals, finance services, industry groups, professional advisors, experts, academics, think-tanks, policymakers, and other regulatory bodies. These entities will have until June 13, 2025, to submit their input, which will be considered to decide the FCA’s next steps.
UK’s 2026 Crypto Overhaul Advances
The Discussion Paper is part of the FCA’s crypto roadmap to expand from the current regime to a more comprehensive regulatory framework. It follows a recent publication of a draft legislation to establish a complete regime for digital assets.
As reported by Bitcoinist, the UK Treasury published the draft and an explainer document detailing the intended policy outcomes of these provisions. The proposed rules will bring exchanges, dealers, and agents into the regulatory limits to crack down “on bad actors while supporting legitimate innovation.”
Meanwhile, digital asset firms with UK customers must meet clear transparency, consumer protection, and operational resilience standards, similar to traditional financial institutions.
UK Finance Minister Rachel Reeves stressed the government’s commitment to making the country a global hub for digital asset technologies, “aligned with the Plan for Change to drive growth, innovation, and security.”
As the FCA stated, these proposals “have been informed by extensive engagement with the crypto asset industry, consumers, traditional finance participants, other regulatory regimes, and input from policy roundtables held in April and May 2024.”
Bitcoin (BTC) trades at $96,787 in the one-week chart. Source: BTCUSDT on TradingView
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