UK’s Financial Conduct Authority Launches Consultation on Proposed Crypto Rules
The UK’s Financial Conduct Authority (FCA) has initiated a public consultation on proposed crypto rules, aiming to bring the industry under formal supervision by 2027. This move is expected to provide a regulatory framework for the crypto market, ensuring consumer protection and promoting innovation.
Key Proposals and Objectives
The FCA has presented three consultation papers, focusing on adapting its existing framework for traditional financial markets to accommodate cryptocurrencies and address the specific risks they pose to consumers. The proposed measures include rules for listing digital assets, standards for trading venues, and supervision of brokers and intermediaries.
- The FCA has opened a public consultation on new crypto rules to bring digital assets under regulatory oversight.
- The proposed measures include crypto asset listings, capital requirements, staking services, and restrictions to prevent insider trading and market manipulation.
According to a report in the Financial Times, the proposed regulations span several areas of the crypto market. For instance, crypto firms must adhere to capital requirements that already apply to Mifid investment firms while complying with new regulatory rules tailored to the digital asset space. Additionally, the FCA plans to exclude best execution rules that apply to traditional exchanges from platforms offering crypto trading services.
Regulatory Framework and Consumer Protection
The FCA also aims to tackle “distributed finance” technology by applying the same rules as traditional finance to peer-to-peer crypto transactions. The regulator wants to ensure that consumers are protected and aware of the risks associated with crypto investments. As David Geale, managing director of payments and digital finance at the FCA, stated, “Our aim is to have a system that protects consumers, supports innovation, and promotes trust.”
The FCA insists that regulation cannot eliminate all risks but should ensure that investors are aware of the risks involved. The regulator’s approach is seen as a balanced one, aiming to build a crypto market “where innovation can thrive but people understand the risks.”
While other jurisdictions, such as the United States, have taken a more cautious approach, the UK’s FCA is moving forward with its regulatory framework. The consultation runs until February 12th, and authorities hope to finalize the new regulation by mid-2026, with full implementation scheduled for October 2027.
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