Until now, UK crypto users mostly encountered the FCA through rules on promotions and anti-money laundering checks. The consultation paper goes much further. It proposes direct oversight of stablecoin issuers, custodians, and crypto-asset trading platforms (CATPs).
The regulator has also clarified that firms need official authorization before serving customers. This condition should, in theory, reduce the risk of sudden platform failures or unclear accountability.
David Geale, the FCA’s executive director of payments and digital finance, said the proposals are designed to strike a balance between innovation and protection. He explained:
“We want to develop a sustainable and competitive crypto sector – balancing innovation, market integrity and trust.”
Geale noted that while the rules will not eliminate investment risks, they will create consistent standards, helping consumers understand what to expect from registered firms.
The UK regulatory framework shift would provide safer custody of assets, better disclosure of risks, and clearer recourse if something goes wrong.
However, the regulator was also frank in its submission, arguing that no rulebook can eliminate the volatility or inherent risks of holding digital assets. Instead, the focus is on ensuring that when consumers choose to invest, they do so within a market that operates transparently and fairly.
According to the FCA:
“We focus our engagement on areas of greatest harm and take a more flexible approach, with less intensive supervision for those firms demonstrably seeking to do the right thing. We also intend to make our areas of focus predictable so that firms have an opportunity to make positive change without the need for regulatory action.”
