Regulator seeks feedback on tailored crypto oversight while balancing innovation and consumer protection
The UK Financial Conduct Authority (FCA) has released a consultation paper outlining how traditional finance rules could be adapted for the cryptocurrency sector. The move marks a major step toward building a comprehensive regulatory framework as Britain seeks to position itself as a global hub for digital assets.
FCA Proposals for Crypto Oversight
According to the paper, the FCA intends to impose minimum standards on crypto firms, covering areas like operational resilience, financial crime prevention, and governance. While many of these requirements mirror those faced by traditional institutions, the regulator is also examining rules unique to the digital asset market.
David Geale, FCA’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.” He emphasized that while risks in crypto cannot be eliminated, clearer standards will improve consumer confidence.
Consumer Duty Debate
One of the key questions raised in the consultation is whether the Consumer Duty — a rule obligating financial firms to deliver good consumer outcomes — should apply to crypto companies. The regulator is also seeking views on whether crypto complaints should fall under the jurisdiction of the Financial Ombudsman Service, which handles disputes between financial firms and customers in the UK.
Government Push for Clear Rules
The FCA’s proposals build on draft legislation published in April by His Majesty’s Treasury, which aims to bring exchanges, dealers, and agents under existing financial rules. Officials have framed the initiative as ensuring the UK is “open for business but closed to fraud and abuse.”
UK-US Cooperation on Crypto Policy
The consultation comes as the UK and the US explore closer cooperation on digital assets. Reports suggest recent discussions between UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent included input from companies like Coinbase, Circle, Ripple, and banks such as Barclays and Citi.
By considering a tailored approach to crypto regulation, the FCA is signaling its intention to strike a balance between protecting consumers and supporting innovation. The outcome of this consultation could shape how the UK competes with other major financial centers in defining crypto’s future.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.