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On September 17, 2025, the UK’s Financial Conduct Authority (FCA) opened a consultation (CP25/25) on extending its handbook rules to firms engaged in regulated crypto-asset activities.
The consultation follows the draft statutory instrument (SI) and policy note published in April 2025 by HM Treasury and forms part of efforts to build a competitive and sustainable crypto-asset sector in the country.
Once the final SI takes effect, activities such as issuing qualifying stablecoins, safeguarding qualifying crypto-assets, operating trading platforms, intermediation and staking will come under FCA supervision.
The regulator also proposes applying standards similar to those for other firms authorised under the Financial Services and Markets Act (FSMA), covering conduct, governance, financial crime and operational resilience.
The proposals include applying the Consumer Duty and conduct of business and product governance rules to crypto-asset firms. They would also give customers access to the Financial Ombudsman Service (FOS) and require firms to meet robust operational resilience standards.
Responses are sought by October 15, 2025, with the consultation closing on November 12, 2025.
The bigger picture
Though still relatively young, the crypto industry has already experienced significant ups and downs, beyond mere market volatility.
It has gone through the Bitcoin bubble, as well as scandals such as those involving FTX and Binance, faced the distrust of regulators and governments (some of which still persists today) and witnessed the introduction of the EU’s Markets in Crypto-Assets (MiCA) Regulation.
It is now seeing a more positive reception from a wide range of governments, including the US, Venezuela and Liechtenstein.
The UK has been relatively slow to move on crypto. It has neither swung as dramatically against it as some jurisdictions, nor made a concerted effort to present itself as a crypto hub.
However, in recent years, both Labour and Conservative politicians have called for adequate legislation and regulatory policy.
In addition, in September 2025, HM Treasury announced the launch of a Transatlantic Taskforce for Markets of the Future that will foster closer UK–US collaboration as the two countries develop their legislative and regulatory regimes for digital assets.
The FCA’s consultation represents a step towards bringing crypto-assets within the scope of UK regulatory compliance.
Announcing the proposed framework, David Geale, the regulator’s executive director of payments and digital finance, said, “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.”
The FCA’s proposals are intended to set clear expectations ahead of HM Treasury’s forthcoming legislation and will give the crypto-asset market time to adapt smoothly to full regulatory oversight.
The consultation lays the pre-legislation groundwork, signalling to firms what standards will apply once the new rules take effect.
One aim is to align crypto-asset regulation with the framework already in place for traditional financial firms. At the same time, the FCA stressed that its rules will be proportionate, balancing high standards with flexibility.
This should be welcome news for UK-based crypto firms, as it could help them compete internationally while also fostering a sustainable and well-regulated domestic market.
Equally, this approach could help normalise and integrate crypto-assets into the wider financial system by giving firms a clear and stable regulatory framework to build compliant products.
This should provide consumers and counterparties with more predictable protections and dispute-resolution options, as well as support institutional participation by reducing conduct and operational risk.
Why should you care?
The extent to which firms in the crypto space will need to adapt to the FCA’s proposed regulatory framework depends on their size and market reach.
The Consumer Duty will be a significant challenge. Payments and e-money firms found it difficult to implement due to its flexibility and lack of prescriptive rules.
Under the Duty, organisations must consider how to demonstrate good consumer outcomes, and this is likely to apply to crypto firms.
For example, a UK-authorised crypto-asset trading platform onboarding retail customers for trading in qualifying stablecoins would need to apply the Consumer Duty by ensuring its products deliver good outcomes.
This would include providing clear disclosures of fees and risks, treating customers fairly during outages and resolving complaints promptly.
Marketing will also be a focal point for boards, and compliance teams will need to pay more attention to this area, ensuring that advertising is accurate and not misleading.
In addition, any new product, such as staking, will need to undergo suitability and value assessments before launch.
Crypto markets are fast-moving and highly volatile, making it difficult to evidence good outcomes. Firms may also struggle to embed product governance and value assessments for complex tokens and to adjust customer-support and complaints processes to meet FCA standards, including providing access to the FOS.
However, other components of the new framework may be easier to adjust to.
For example, large firms already present in the EU, such as Bitpanda and Coinbase, are likely at an advantage because they already comply with the EU’s Digital Operational Resilience Act (DORA).
DORA’s requirements on ICT risk management, incident reporting, third-party oversight and resilience testing overlap heavily with the FCA’s operational resilience rules. As a consequence, such firms will typically already have enterprise-wide risk frameworks, documented third-party oversight and established incident-response processes.
This should make it easier for large crypto firms reduce the gap to full FCA compliance compared with smaller UK-specific firms.
Going forward, firms should consider the following actions:
- Review products and customer journeys against the Consumer Duty by starting to map out fees, risks, disclosures, complaint handling and governance processes to demonstrate good customer outcomes.
- Assess operational resilience and ICT risk controls, benchmarking current systems, incident reporting and third-party oversight against the FCA’s requirements.
- Strengthen governance and financial crime controls, ensuring that senior management accountability, clear roles and responsibilities and robust systems for AML, fraud prevention and transaction monitoring are in place.
- Prepare for FCA regulation by responding to the consultation, identifying any gaps in policies, staffing or infrastructure, and developing an implementation plan so the firm can comply once the SI and final rules take effect.
Firms that can position themselves to meet the FCA’s expectations will mitigate risk, and help normalise crypto-assets as a safe and integrated part of the UK financial system.
