FCA crypto proposals aim to bring digital asset firms under full UK oversight by 2026, spelling out provisions for governance, resilience, and crime prevention. The regulator says the framework mirrors traditional finance rules but will be adapted to reflect crypto’s unique risks.
Summary
- FCA plans full UK oversight of crypto firms by 2026, adapting TradFi rules for governance, resilience and crime prevention.
- Proposals include extending the Senior Managers Regime, applying Consumer Duty, and allowing disputes at the Financial Ombudsman.
- The regulator aims to balance innovation with consumer protection and test the industry’s readiness for stricter oversight.
On September 17, the Financial Conduct Authority announced its proposal for comprehensive cryptoasset regulation, publishing a detailed consultation paper that maps how existing financial rules will be adapted to govern the digital asset sector.
The proposal outlines the application of the FCA Handbook to crypto firms, targeting key areas including operational resilience, financial crime prevention, and senior management accountability.
According to the announcement, the move follows HM Treasury’s draft legislation from April 2025 that legally expands the FCA’s remit to oversee new regulated activities like operating trading platforms, custody, and staking. The regulator is now seeking industry feedback by October and November deadlines, with a final framework slated for 2026.
A closer look at what the FCA is proposing
The FCA’s consultation paper laid out several proposals that show how the financial watchdog intends to bring crypto firms more firmly under regulatory oversight. A central pillar is the full application of the Senior Managers and Certification Regime, which will impose clear accountability on individuals leading crypto firms, a direct response to the industry’s historical opacity.
Firms will also be expected to meet stringent operational resilience standards, mandating robust systems to withstand cyberattacks, outages, and other operational shocks that have previously led to significant consumer losses.
The FCA has also opened a crucial debate on applying its flagship Consumer Duty to crypto activities. This would legally obligate firms to deliver good outcomes for retail customers, a potentially transformative shift from the current caveat emptor environment.
Tied to this is a consultation on integrating cryptoasset disputes into the Financial Ombudsman Service, which would provide a formal, independent redress mechanism for the first time. The FCA itself acknowledges that the inherent volatility of cryptoassets will remain, but these measures aim to insulate consumers from poor business practices and outright fraud.
“We want to develop a sustainable and competitive crypto sector – balancing innovation, market integrity and trust. Our proposals won’t remove the risks of investing in crypto, but they will help firms meet common standards so consumers have a better idea of what to expect,” David Geale, FCA’s executive director of payments and digital finance, said.
The coming consultation period will be a critical test, revealing whether the industry is prepared to operate with the rigor of traditional finance or if it will resist the very structures it has long claimed to seek.