The Financial Conduct Authority (FCA) has unveiled its proposed framework for regulating digital asset companies in the UK, aiming to bring the sector under full supervision by 2026. The proposal outlines provisions for governance, resilience, and crime prevention, adapting traditional financial rules to address the unique risks associated with crypto assets.
The FCA’s plan includes the expansion of the Senior Manager regime, application of consumer obligation, and permission for disputes to be resolved through the Financial Ombudsman Service. This move aims to strike a balance between innovation and consumer protection, while testing the industry’s willingness to operate under stricter supervision.
FCA’s Proposal for Comprehensive Cryptoasset Regulation
The FCA’s consultation paper, published on September 17, provides a detailed outline of the proposed regulatory framework. The framework applies the FCA manual to crypto companies, focusing on key areas such as operational resilience, financial crime prevention, and management accountability.
According to the announcement, the proposal follows HM Treasury’s designs, which expand the FCA’s remit to oversee new regulated activities, including business trading platforms, custody, and staking. The regulatory authority is seeking feedback, with deadlines set for October and November, and a final framework expected to be implemented by 2026.
Key Aspects of the FCA’s Proposal
The FCA’s consultation paper outlines several key suggestions, including the full application of the Senior Manager and Certification regime. This would impose clear accountability on the industry, addressing concerns over historical opacity. Companies would also be required to meet strict standards of operational resilience, implementing robust systems to withstand cyber attacks, failures, and other operational shocks.
The FCA is also considering the application of its flagship consumer obligation to crypto activities, which would require companies to achieve good outcomes for retail customers. This could mark a significant shift from the current environment, where consumer protection is often lacking. Additionally, the FCA is proposing the integration of cryptoasset disputes into the Financial Ombudsman Service, providing a formal, independent resolution mechanism for the first time.
The FCA acknowledges that the inherent volatility of cryptoassets remains, but these measures aim to protect consumers from poor business practices and direct fraud. As the FCA states, “We want to develop a sustainable and competitive crypto sector – innovation, market integrity, and trust. Our proposals will not remove the risk of investing in crypto.” The upcoming consultation period will be a critical test of the industry’s willingness to operate under stricter supervision.
For more information on the FCA’s proposal, please visit https://crypto.news/fca-crypto-proposal-seeks-full-uk-oversight-for-firms-by-2026/
