The United Kingdom’s Financial Conduct Authority (FCA) is signaling a more supportive stance toward the fast-evolving cryptocurrency sector. In a recent update reported by the Financial Times, the regulator revealed plans to ease some traditional financial requirements for crypto firms. This move reflects the FCA’s recognition that digital asset businesses operate differently from banks and traditional financial institutions.
A Shift Toward Tailored Regulation for Crypto Firms
The FCA plans to relax certain regulations that were originally designed for banks and investment platforms. For example, crypto companies may soon face less stringent requirements when it comes to appointing senior managers or maintaining specific systems and controls. The reasoning is clear: these businesses don’t pose the same level of systemic risk as legacy financial players.
This updated approach also acknowledges the volatile nature of crypto markets. As a result, consumers may not be entitled to traditional protections such as “cooling-off” periods, which typically give customers time to reconsider investment decisions. The FCA appears to be aligning regulations more closely with how crypto markets function in real-time.
Focused Oversight on Key Industry-Specific Risks
While some rules are being relaxed, the FCA is simultaneously planning to tighten oversight in other critical areas—most notably, cybersecurity. As the crypto industry continues to grow, so does the risk of hacks and cyberattacks. The FCA is keen to ensure that firms implement strong protections against these threats.
David Geale, the FCA’s executive director for payments and digital finance, stressed that conventional financial rules can’t just be “lifted and dropped” into the crypto world. Instead, a more thoughtful and flexible regulatory approach is needed. The regulator’s ultimate goal is to fully integrate cryptocurrency into the U.K.’s broader financial oversight framework by 2026.
This balanced strategy—supporting innovation while addressing the unique risks of digital assets—could help the U.K. become a more attractive destination for legitimate crypto businesses, without compromising investor protection or financial stability.
