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By extending the Consumer Duty to crypto-assets, the consultation sets minimum operational, compliance and consumer protection standards, challenging firms to align practices or risk falling behind in the UK market.
The Financial Conduct Authority (FCA) has announced a consultation on how the Consumer Duty, which requires firms to act to deliver good outcomes for their consumers, should apply to crypto-assets.
It is also seeking views on the handling of complaints, including whether consumers should be able to refer them to the Financial Ombudsman Service (FOS).
David Geale, executive director of payments and digital finance at the FCA, said the regulator aims to develop a sustainable and competitive crypto sector that balances 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,” Geale noted.
“We are working now on what those standards should look like, ahead of legislation to bring it within our regulation.”
A key part of the consultation will consider how the FCA’s Handbook rules will apply to crypto-asset firms.
The consultation closes on November 12, 2025, and the regulator will publish final rules in 2026.
A broadening framework
The UK’s current crypto-asset rules cover financial promotions and the prevention of financial crime, meaning that firms are licensed due to anti-money laundering rules. The FCA plans to expand these rules to create a more comprehensive framework, which will be set out in forthcoming legislation.
The regulator is aiming to protect consumers from poor operational practices, thereby fostering trust in the sector. The rules are also intended to be proportionate and to allow UK firms to compete internationally.
Crypto-asset firms will need to be operationally resilient and implement robust systems and controls to prevent financial crime.
Firms and individuals conducting these newly regulated activities will need to apply for authorisation before undertaking them in the UK.
Building the crypto sector
The consultation is the latest in a series of initiatives by the UK aimed at developing its crypto-asset sector.
The government is hoping that establishing a clear regulatory framework will encourage innovation and investment in the sector, and in turn provide a much needed boost to economic growth.
The consultation follows the FCA’s publication of a discussion paper on its proposals for a regulatory regime for crypto-asset trading platforms, intermediaries, crypto-asset lending and borrowing. The paper also addresses staking, decentralised finance and the use of credit to purchase crypto-assets.
Moves towards a comprehensive crypto-asset regulatory framework in the UK mirror similar developments in other jurisdictions.
As covered by Vixio, earlier this month, the US Senate Banking Committee produced a draft bill intended to overhaul the regulatory landscape for crypto-asset firms.
The Responsible Financial Innovation Act of 2025 would establish a national regulatory framework for crypto-assets, assigning oversight responsibility to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
Next steps
The FCA’s consultation represents a clear step towards minimum standards regulation for the UK crypto-asset sector.
It may be a signal that the regulator intends to integrate crypto-assets into its mainstream consumer protection and conduct frameworks, rather than creating a bespoke, loosely defined set of rules.
For crypto-asset firms in the UK, the consultation has several key implications.
For example, any firm offering regulated activities will need prior FCA authorisation. Early preparation of operational, compliance and governance frameworks will be essential to secure approval.
Firms must also ensure that products and services deliver fair outcomes, implementing robust systems to prevent consumer harm. This may involve revising onboarding, risk disclosure and complaint-handling processes.
Given that the FCA is emphasising operational resilience and anti-financial crime controls, firms may need to invest in technological and procedural safeguards, as well as staff training, to demonstrate compliance.
Finally, UK firms will need to consider the consultation in the context of international regulatory trends. These include the proposed Responsible Financial Innovation Act in the US, as well as the EU’s framework under the Markets in Crypto-Assets (MiCA) Regulation and the Digital Operational Resilience Act (DORA). Firms operating across borders may benefit from harmonising compliance approaches to meet multiple jurisdictions’ expectations.
In summary, the consultation could be a turning point in UK crypto regulation, marking a shift towards consistent minimum standards and formal authorisation, and firms that proactively engage with the consultation and strengthen their compliance and operational practices will be well placed to succeed as the market matures.
