In a move that could significantly reshape the UK’s burgeoning cryptocurrency landscape, the Financial Conduct Authority (FCA) has launched a discussion paper seeking input on various aspects of the sector, including intermediaries, staking, lending, borrowing, and decentralized finance (DeFi). This initiative, unveiled following the Treasury’s draft legislation announcement earlier this week, aims to bring specific crypto activities under the FCA’s regulatory umbrella, marking a pivotal step in the country’s approach to digital assets.
Navigating the Regulatory Maze
The FCA’s proposal is not merely an exercise in bureaucratic expansion; it represents a broader strategy to provide much-needed clarity and stability to the fast-evolving crypto industry. “Crypto is a growing industry. Currently largely unregulated, we want to create a crypto regime that gives firms the clarity they need to safely innovate, while delivering appropriate levels of market integrity and consumer protection,” said David Geale, the FCA’s executive director of payments and digital finance. This sentiment underscores the regulator’s dual mission of fostering innovation while safeguarding investor interests.
Critics, however, argue that the FCA’s oversight has been excessively restrictive. Since 2020, when the authority first assumed responsibility under anti-money laundering rules, only 51 out of 368 crypto firms have successfully navigated the registration process. This high barrier to entry has left many industry players frustrated, and the new authorization regime, expected by 2026, promises to recalibrate this balance.
Credit Cards and Crypto: A Delicate Dance
One of the more contentious topics within the discussion paper is the potential restriction on using credit cards for crypto purchases. “We are considering a range of restrictions, including restricting the use of credit cards to directly buy cryptoassets, and using a credit line provided by an e-money firm to do so,” the document notes. This proposal appears to be a response to concerns about consumer debt levels and the speculative nature of crypto investments.
Industry experts are divided on this issue. Some see it as a necessary measure to prevent financial overextension among consumers, while others warn it could stifle market liquidity and slow adoption rates. According to Oliver Knight, a financial analyst, “Limiting credit card usage might mitigate some risks, but it could also deter new investors who see crypto as an accessible entry point into the financial world.”
Historical Context and Future Implications
The FCA’s move comes at a time when global regulators are grappling with how best to approach the crypto sector, a space notorious for its volatility and rapid innovation. Historical precedents show that markets can react dramatically to regulatory announcements—Bitcoin’s infamous 2018 plummet followed several countries’ crackdowns on digital currencies.
Looking ahead, the FCA’s next steps will be closely watched by both domestic and international market participants. The deadline for public comments is set for June 13, with a final consultation on the regime anticipated later this year. Whether this initiative will strike the right balance remains to be seen, raising questions about the future landscape of crypto regulation in the UK.
As the dialogue unfolds, stakeholders are encouraged to weigh in, ensuring a broad range of perspectives are considered. The outcome will not only shape the UK’s crypto market but could also set a precedent for other jurisdictions grappling with similar regulatory challenges. While the path forward appears promising, it is also fraught with uncertainty—a hallmark of the crypto world.
Source
This article is based on: UK’s FCA Seeks Public and Industry Views on Crypto Regulation
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
