The Financial Conduct Authority (FCA) is consulting on a cryptocurrency regulatory framework in a move that it hopes will nurture a safer environment in which to invest in digital assets.
The financial services watchdog today (16 December) called for industry input into a proposed regime for assets such as bitcoin and other digital currencies that would better protect consumers.
Under the proposals, which have been endorsed by the Treasury, legislation coming into force from 2027 will require cryptoasset firms to be regulated by the FCA, to provide legal clarity for firms while strengthening consumer protection. The government said the changes would enhance transparency and oversight across the sector and help tackle market abuse and poor conduct.
“Regulation is coming – and we want to get it right… Our goal is to have a regime that protects consumers, supports innovation and promotes trust.”
David Geale, Financial Conduct Authority
David Geale, executive director for payments and digital finance at the FCA, said: “Regulation is coming – and we want to get it right. We’ve listened to feedback, and now we’re setting out our proposals for the UK’s crypto regime.
“Our goal is to have a regime that protects consumers, supports innovation and promotes trust. We welcome feedback to help us finalise these rules.”
UK embraces digital assets
The FCA said in its announcement that it wanted to support “a market where innovation can thrive, but where people understand the risks”.
It added: “Regulation cannot – and should not – remove all risk. Instead, it should make sure anyone investing in crypto does so with their eyes open.”
The crypto consultation covers a wide range of topics, including disclosure requirements, measures to stop market abuse, standards for trading platforms, rules for intermediaries, decentralised finance regulation, and prudential requirements to help firms manage risk.
Chancellor Rachel Reeves said bringing cryptoassets into the regulatory perimeter was “a crucial step in securing the UK’s position as a world-leading financial centre in the digital age”, adding that clear rules would allow firms to invest and innovate while “locking dodgy actors out of the UK market”.
The Treasury said the new regime was intended to support responsible innovation, promote open and competitive markets, and position the UK as a global hub for digital assets. It also forms part of broader work with international partners, including the US, to develop global standards for crypto regulation.
Cryptoassets and pension schemes
While the FCA’s announcement was aimed primarily at retail investors in the crypto sector, it may also be relevant for occupational pension schemes – particularly as trustees assess whether and how digital assets could fit within long-term investment strategies. The move towards regulation may address some of the governance and legitimacy concerns that have so far limited institutional uptake in the UK.
Last week, the adviser to an unnamed UK pension scheme disclosed that it had made a 56% gain in 12 months from a modest allocation to bitcoin.
Despite this, legal and investment experts have emphasised that trustees remain bound by duties of prudence and diversification, and that any allocation to digital assets would require robust governance and risk oversight.
Additional reporting by Nick Reeve.
