- UK FCA publishes discussion paper on future crypto regulation.
- The government will no longer pursue a phased approach to crypto legislation.
- Focus on the development of balanced market abuse and admission regimes.
The UK’s Financial Conduct Authority (FCA) has unveiled a discussion paper outlining its strategy for regulating public offerings of cryptocurrencies and crypto assets (ICOs). Although not yet law, this document sets out a roadmap for the future regulatory landscape.
The government’s legislative approach
The UK government is taking significant steps to establish a regulatory framework for digital assets. After announcing its plans in 2023, the government confirmed in November 2024 that it would move forward with legislation to bring digital assets under the FCA’s regulatory scope.
One of the main changes from the old regime is that, for the first time, the government will not manage the regulation of stablecoins separately from cryptocurrency trading; both will be subject to the same law. This reflects the growing importance of digital assets and associated sectors within the wider financial system.
Broader definitions of crypto assets and expansion of regulation
In 2023, the law expanded the definition of digital assets to encompass various digital assets that can be transferred, stored or exchanged electronically. This includes, among others, stablecoins like Tether and Bitcoin. However, security tokens, which are already regulated, do not fall under this scope.
The FCA is preparing for a broader mandate than just monitoring anti-money laundering activities. Its new scope will also involve the supervision of digital currency trading, regulation of stablecoins, custody and intermediary services.
The FCA is focused on establishing the crypto market under two main regimes that it has established. This includes establishing the market abuse regime and the D&O regimes for crypto asset disclosure.
These measures will help ensure that the market is fair and transparent while enabling growth. The FCA wants to build a regulatory regime that takes risks seriously, without stifling innovation.
International collaboration and future steps
In addition to the national consultation, the FCA is already working internationally. She has played a leading role in the development of global regulation, including the IOSCO recommendations on crypto and digital assets. As a member of the FSB, the FCA will continue to work to ensure global standards in crypto regulation.
This discussion paper seeks feedback from those involved in the digital assets industry, both domestically and internationally. The FCA considers it particularly important to consider whether its proposals could result in significant changes to current business models, whether the proposed measures are most appropriate to prevent unjustified risks, or whether these measures have unintended consequences.
The responses will inform the drafting of more detailed rules, and a formal consultation will follow after the adoption of the necessary regulatory instruments. This roadmap forms a central point in the UK’s approach to crypto regulation, making the regime more structured and secure while allowing for more innovation.
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