In the next step in the long process of regulating cryptocurrency in the UK, the FCA is seeking opinions on two areas under its purview.
According to the Financial Conduct Authority (FCA), crypto asset regulation in the United Kingdom could begin in 2026. The FCA's newest step in that direction is issuing a discussion paper on admissions, disclosures, and market abuse legislation.
According to government plans, the FCA's authority will be expanded beyond its existing jurisdiction over anti-money laundering and promotions to cover crypto asset trading, stablecoin regulation, intermediation, custody, and other operations.
The Financial Services and Markets Act 2000 (Regulated Activities) Order (RAO) 2001 regulates tokenized financial instruments, security tokens, and investment vehicles.
The FCA intends to enable crypto asset offerings exclusively under exemptions:
"Public offerings shall be forbidden unless an exemption applies. For example, when admitted to trading on a CATP [crypto asset trading platform] or only open to qualified investors, such as institutional investors." "
Once an exemption is granted, due diligence and disclosures are completed, and the asset is admitted to the CATP at its discretion. Public disclosures must fulfil particular standards; otherwise, "w" can use our power […] to direct a firm to provide compensation about breaches of the financial promotions regime."
The United Kingdom has a civil market abuse law for traditional finance. However, it has already been ruled that the regime cannot be applied directly to crypto assets. The FCA recognized the impact of the International Organization of Securities CoCommissions'IOSCO) crypto and digital asset market recommendations on its proposals.
According to the FCA, “T" the government response has clarified the intention to facilitate cross-trading platform information sharing through legislation.” "The FCA does not aim to establish channels to enable sharing. Nonetheless:
"For example, if CATP 1 offboards User A and User A already has an account with CATP 2, information acquired by CATP 1 about User suspected market abuse behaviour may be shared with CATP 2. Such information could assist CATPs in making better decisions." "
HM Treasury announced its ambitions for a crypto regulatory framework in February 2023.
In November 2024, the new government confirmed its desire to keep to the plan, albeit with a revamped implementation strategy that eliminates the phased approach. The FCA will hold consultations on stablecoin regulation separately.
It will solicit feedback on the 49 questions in the document from domestic and international stakeholders, notably those in the wholesale sector, until March 14, 2025.