The Financial Conduct Authority (FCA) is poised to deal with the cryptoasset regulation, issuing discussion and consultation papers throughout 2025. It is urging feedback on the matter as more and more Britons invest in what is a largely unregulated sector.

Speaking at the inaugural ICAEW Digital Asset Conference on 29 November, Jane Moore, Head of Department, Payments and Digital Assets at the FCA, said that she needed stakeholder feedback to ensure the FCA gets the regulation right.

Moore said: “I need you all to look at what we propose, to consider it, to work with your clients to consider it from your own perspectives and tell me whether it works or not. As we develop the crypto regime, I need input.”

Crypto is predominantly unregulated and anyone who invests in it may lose all their money, she added. “That’s the FCA line and that’s one of my key messages.”

Crypto – a global issue

The UK financial services regulator is working with global standard-setting bodies ahead of implementing any new rules. In November 2023, the International Organisation of Security Commissions (IOSCO) issued 18 policy recommendations for the regulation of crypto and digital assets. The Financial Stability Board and the Financial Action Task Force have also issued recommendations. 

Regulators around the world are taking different approaches to the issue, said Moore. “Some countries are banning it. Some countries are using existing frameworks. Some countries are building new frameworks. But there is progress around crypto regulation,” she said.

The crypto roadmap

The UK regulator issued its crypto roadmap in November 2024 alongside consumer research showing that ownership of crypto is rising from around an estimated 10% in 2022 to around 12% of UK adults owning crypto by August 2024.

The FCA’s crypto roadmap is divided into bite-sized chunks and covers topics ranging from prudential, market views, admissions and disclosures, to trading platforms, intermediaries, lending and staking.

“The regime needs to work for industry. It needs to work for consumers. It needs to work for advisers and it needs to protect consumers. It needs to deliver market integrity, and it needs to deliver growth as well. So, we’re working with others,” Moore said. “We’re not the only authority who’s active in this space. Treasury is very, very active. There is lots going on, but that’s policy.”

Supervision first

Beyond policy, the FCA is also focused on supervision. Moore said that the FCA has a level of supervision over crypto firms at present and that the UK regulator has received more than 300 applications for registration, but only 48 firms were successful. 

“That means a significant number of firms have either withdrawn or been unsuccessful, but that’s because they don’t meet our standards. We don’t register firms that don’t meet our standards and that will remain going forward,” she said. 

More and more firms want to offer crypto services, but Moore warned that those firms must meet UK compliance standards.

Getting the basics rights

“We’ve had some really shockingly bad examples in firms where they have not had money laundering practices or systems. There are a lot of basics that firms are not getting right at the moment. So those of you who advise the crypto industry, you need to make sure that you’re advising firms to understand the requirements that are imposed on them,” Moore said.

The FCA offers pre-application support and wants crypto firms to be successful, she added. It is encouraging the industry to mature and to engage with the regulator on issues and risks before they become a problem. 

“We are looking for firms to develop, embed and maintain a culture of compliance, and that’s the key thing. It needs to be built into their DNA. We want to see firms succeed. We want them to offer safe, reliable services and to innovate and create new offerings, all of which take into account consumer protection and market integrity,” Moore said.

Crypto ATMs

In the UK there are currently no registered crypto ATMs. If any exist, they are operating illegally. Moore said that in 2023, the FCA visited 34 locations suspected of hosting crypto ATMs across the UK, closing down 26 machines that were operating unlawfully.

In September, the FCA charged an individual with running a network of illegal crypto ATMs, which was the FCA’s first criminal prosecution relating to unregistered crypto activity. 

The financial promotions regime is the key consumer protection in place at the moment, with rules coming into force in October last year. Promotions “need to be clear, fair and not misleading”, Moore said. 

FCA crackdown

Moore said the FCA has already taken down 900 scam crypto websites, removed more than 50 apps from UK app stores and worked with social media platforms to remove illegal contact content. 

“We’ve cracked down on influencers and we’ve issued more than 1,700 consumer alerts related to firms illegally promoting crypto to the UK,” she added.

Moore pinpointed her top three risks: operational technology and cyber resilience; financial resilience; and market abuse. 

“As you can imagine, crypto can be technologically complex alongside various outsourced relationships – that’s one of the key things that worries me. Financial resilience, lack of capital and lack of liquidity can result in issues both as a going concern and a gone concern. Crypto firms are generally thinly capitalised and that can create significant issues in the future. In a global market, there are opportunities to manipulate markets across the world,” Moore said. 

The FCA is working towards developing a well-functioning crypto market in the UK, which is safe, competitive and sustainable, and underpinned by market integrity and consumer protection. 

Moore urged: “The next year is going to be really key for the FCA in developing the crypto regime. And I need help. I need everyone to engage with the consultations and with the discussion papers.”