UK FCA consults on rules and guidance for regulated cryptoasset activities

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/25 (CP), alongside a press release, setting out its proposed regulatory framework for cryptoasset activities under the Financial Services and Markets Act 2000 (FSMA). This follows HM Treasury's (HMT) draft statutory instrument (SI) to bring qualifying cryptoasset activities within the scope of the Regulated Activities Order 2001 (RAO) and under the FCA's remit. Qualifying cryptoasset activities will include issuing qualifying stablecoins, safeguarding qualifying cryptoassets and specified investment cryptoassets, operating a qualifying cryptoasset trading platform (CATP), intermediation and staking. Firms and individuals undertaking these activities will require FCA authorisation before operating by way of business in the UK.

Chapters 1–5 of the FCA's CP detail the core proposals about how existing FCA Handbook rules will apply to cryptoasset activities, with adaptions to reflect the unique risks of cryptoassets. Notably, the FCA intends to extend the existing definition of "designated investment business" to qualifying cryptoasset activities. The FCA proposals cover the Threshold Conditions and Principles for Business; governance, including individual accountability; systems and controls; operational resilience; environmental, social and governance requirements; financial crime prevention; and conduct-of-business standards.

Chapters 6–7 of the CP open a targeted discussion on: (i) the application of the consumer duty to cryptoasset activities; (ii) the complaints and redress mechanisms that should apply, including potential access to the Financial Ombudsman Service and the scope of protection under the Financial Services and Compensation Scheme (initially considered not to extend to newly regulated cryptoasset activities in the FCA's November 2023 stablecoin discussion paper, but is now under reconsideration and subject to a future consultation); and (iii) the application of the Conduct of Business Sourcebook and Product Intervention and Product Governance Sourcebook, including whether reliance on the consumer duty may be more appropriate for future cryptoasset firms offering cryptoasset regulated activities.

The deadline for comments on the proposals in Chapters 1–5 is 12 November, and final rules are expected in 2026. Appendix 1 to the CP includes a draft Handbook instrument. Feedback to the discussion elements in Chapters 6–7 should be submitted by 15 October. The FCA will consult on detailed proposals for these topics in 2025–2026, in line with the FCA's Crypto Roadmap.

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