Britain’s main financial watchdog rolled out plans Tuesday to regulate certain areas of the crypto industry for the first time. The measures cover everything from listing rules to stopping people from trading on inside information.
The Financial Conduct Authority released its plans just one day after lawmakers introduced draft laws targeting crypto businesses. The move attempts to strike a balance between making Britain an attractive place for digital money operations while keeping investors safe in a market known for big risks.
The watchdog backed away from some of its tougher ideas that came out earlier this year. Crypto trading sites will now be allowed to list their own digital tokens on their platforms and buy and sell assets directly with customers—two activities the regulator had initially wanted to stop.
Tuesday’s announcement came in three separate documents that spell out how the regulator plans to take its current rulebook for regular financial markets and reshape it to fit the unusual characteristics and dangers of digital currencies like Bitcoin.
People and companies have until February 12 to send in their thoughts on the proposals. The final version of Britain’s crypto rules should be ready sometime next year before they officially start in 2027.
Officials push back against critics
David Geale, who runs payments and digital finance at the FCA, said the watchdog wants to do this correctly. “Regulation is coming — and we want to get it right,” Geale explained. “Our goal is to have a regime that protects consumers, supports innovation and promotes trust.”
Some people in the industry say Britain has been too careful about welcoming cryptocurrency, especially compared to how Donald Trump’s government in the United States plans to take a hands-off approach. The FCA, however, said it wants a crypto market “where innovation can thrive, but where people understand the risks.”
The regulator made clear it cannot and should not eliminate every danger. “Instead, it should make sure anyone investing in crypto does so with their eyes open,” the watchdog said.
Companies dealing in digital assets will have to follow the money rules that already exist for Mifid investment businesses, plus a brand-new set of requirements made just for crypto. They must also keep enough cash and liquid holdings on hand so they can shut down operations without causing serious damage if needed.
The FCA warned that regulation cannot protect against every possible problem in the crypto space. “Anyone who buys cryptoassets should be aware of the risks involved — including that they might lose all the money they invest and the significant volatility of the cryptoassets’ value,” the regulator stated.
Framework targets market abuse and staking
The new framework covers rules for crypto middlemen and brokers, steps to prevent insider dealing and price manipulation, and oversight of companies running staking programs where people lock up their digital coins to earn rewards. The regulator said certain best-execution standards that regular stock exchanges must follow will not apply to crypto trading platforms.
The watchdog also tackled the tricky issue of overseeing distributed finance technology, where deals happen directly between two parties without a middleman. The FCA wants “the same rules that apply in traditional finance should also apply” to this newer system.
Some questions remain unanswered. The regulator plans to ask for input during the first three months of 2026 about whether crypto firms should fall under consumer duty requirements that force companies to ensure good results for clients, and whether customers can take complaints to the Financial Ombudsman Service.
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