The UK’s Financial Conduct Authority (FCA) has published new proposals that would exempt cryptocurrency companies from certain rules that normally apply to banks and traditional financial firms, in a move to make the UK more competitive in the global digital asset space.
What Exactly Is Being Proposed
-
Crypto firms may be exempted from rules requiring them to always act with integrity, skill, care, and diligence, and from some obligations to prioritize customer interests.
-
The FCA is consulting on whether the Consumer Duty (a regulation that ensures firms deliver good outcomes for consumers) should apply to crypto firms. For now, firms may be exempt from some of these duties.
-
Some rules around senior management responsibilities, systems and controls, and operational resilience will still apply, but may be adapted to the crypto industry’s unique risks.
Why FCA Is Doing This
-
To strike a balance: encourage innovation in crypto, while still protecting consumers and financial stability.
-
The FCA acknowledges that traditional finance rules are not always suitable or effective for cryptoasset businesses, given their code, decentralised setups, and different risk profiles.
-
The regulator aims to give UK crypto firms a more predictable and proportionate regulatory framework, so the industry can grow without being hampered by excessive compliance burdens.
Risks & Criticisms
-
Some industry watchers warn that loosening standards could reduce protections for consumers, especially in a market already prone to scams, hacks, and price volatility.
-
There is concern that if crypto firms are not held to strong standards (especially around customer interests and conduct), trust in the sector could suffer.
-
Regulatory arbitrage: firms might exploit gaps in weaker rules to operate in risky ways.
What’s Next
-
The FCA’s consultation is open until November 12, 2025. Feedback from firms, consumer groups, and other stakeholders will shape the final rules.
-
Final rules are expected to be published in 2026, when the legislation that creates a formal regulatory regime for cryptoasset activities becomes law.
 |
| Ad |
Implications for the Crypto Industry
-
For startups: potential relief from regulatory burdens could lower costs and barriers to entry.
-
For investors: may lead to more players entering the UK market → possibly more innovation and options.
-
For consumers: while protections may loosen in certain areas, there will still be rules in place for operational resilience, cyber security, and financial crime prevention.
Conclusion
The FCA’s proposal frames a pivotal moment for the UK’s crypto sector. By proposing lighter rules in some areas, the regulator is signaling a shift toward tailored regulation that fits the unique nature of cryptoassets. But with that flexibility comes risk. How well the UK balances innovation with consumer protection will be watched closely, both domestically and internationally.
Post a Comment