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FCA Sets the Stage for UK Crypto Regulation Overhaul with New Standards

The UK's Financial Conduct Authority (FCA) is undertaking a significant consultation aimed at establishing new minimum standards for cryptocurrency firms.

This initiative seeks to apply rules from traditional finance to enhance consumer protection and market integrity within the crypto sector.

While this move has been welcomed as a step forward, the FCA's regulatory framework has faced criticism for being slow and overly restrictive.

The consultation paper CP25/25 outlines proposals focusing on operational resilience, effective systems to combat financial crime, and customer complaint handling.

David Geale, the FCA's executive director of payments and digital finance, stated that the goal is to foster a sustainable crypto sector while maintaining consumer trust.

The FCA has set deadlines for public feedback, with discussions continuing through October and November 2025.

Despite a growing interest in cryptocurrencies—evidenced by a 12% ownership rate among UK adults—many businesses are frustrated by the perceived regulatory hurdles, prompting some to relocate offshore.

Critics argue that the UK's approach is disjointed and fails to consider the unique attributes of digital assets, labeling all cryptocurrencies as high-risk.

In response, the FCA is considering whether to exempt crypto firms from certain traditional financial obligations, aiming to promote innovation while safeguarding consumer interests.

The outcome of this consultation will potentially reshape the UK's reputation in the global crypto landscape and lay the groundwork for comprehensive regulations by 2026.