FCA regulation on crypto assets: What you should know

The UK wants crypto markets to grow, but it wants them to be safe. As such, the Financial Conduct Authority (FCA) plays such a central role, determining who can operate, how firms must conduct their business, and what safeguards clients can expect. This guide explains the FCA’s evolving framework, its implications for institutions, and how to prepare.

The FCA’s regulatory roadmap for crypto assets

The FCA has moved steadily from warnings about consumer risk to building a detailed rulebook. Recent milestones include:

1. Registering cryptoasset firms under anti-money laundering rules.
2. Extending financial promotions oversight to crypto.
3. Publishing consultations on stablecoins and custody.
4. Preparing new prudential standards (CRYPTOPRU) for UK firms.

You can view the key milestones in UK crypto regulation here.

Each step signals greater integration of crypto into the mainstream financial system, and higher expectations for firms operating within it. For institutions, the message is clear: crypto must align with the resilience and standards of traditional finance.

Research from the FCA on consumer attitudes and behaviours towards crypto shows that 12% of UK adults now own crypto, up from 10% in previous findings. This steady increase highlights how important strong regulation has become as adoption grows.

Core areas of FCA oversight

Trading platforms and intermediaries

Crypto exchanges and brokers face stricter controls. The FCA expects them to implement robust onboarding, surveillance, and reporting processes, mirroring those in traditional markets.

Stablecoin issuance and custody requirements

Stablecoins are central to payments and settlements. The FCA will align their treatment with e-money rules, demanding clear redemption rights and ring-fenced client assets.

Lending, borrowing, and credit for crypto purchases

The regulator has flagged risks in lending markets, including liquidity mismatches and retail exposure. Firms offering loans or credit for crypto must prove they can protect customers and withstand shocks.

Staking and decentralised finance (DeFi)

Staking and DeFi may fall under existing rules when structured like investment products. The FCA is exploring how to strike a balance between innovation and investor protection, which may involve providing more guidance and, ultimately, increased oversight.

Enforcement and authorisation trends

Strengthened enforcement teams and focus areas

The FCA has strengthened its enforcement team and now takes a stricter stance on unregistered activity. It has blocked many firms from operating where compliance systems are weak. Enforcement activity now focuses on firms that expose clients to avoidable risks, mislead investors, or fail to meet basic governance standards.

Application process challenges and improvements

Authorisation remains a significant challenge: most applicants fail due to gaps in governance, unclear structures, or poor risk management. However, the regulator is also streamlining the process, issuing more detailed guidance and engaging more closely with firms that show robust systems. Institutions with strong compliance cultures are best placed to succeed.

Expanding consumer access

The potential lifting of the crypto ETN ban

A key change under review is the potential lifting of the ban on crypto exchange-traded notes (ETNs) for professional investors. The FCA is reassessing whether these products, when restricted to institutions, can offer safe and efficient exposure to crypto markets.

What this means for institutional investors

Lifting the ETN ban will provide institutions with a new, regulated route to crypto exposure, marking a significant milestone for mainstream adoption in the UK. It would also give professional investors more flexibility to manage risk within regulated products, and signal growing confidence in crypto’s role within the wider financial system.

What institutions should so now

Monitor regulatory consultations and timelines.

Stay close to FCA updates. They set the pace and direction of the UK’s regulatory approach. Assign responsibility to FCA compliance or legal teams to track developments and translate them into business actions.

Map business models to new definitions

Review your services against FCA categories. Make sure you understand precisely where your activities fit. Update documentation and client disclosures to reflect those definitions.

Align custody and issuance practices with CASS-like safeguards

Follow standards that mirror the FCA’s Client Assets Sourcebook (CASS). Segregate client assets, document redemption rights, and ensure operational processes can withstand audits or stress events.

Review lending and staking offerings.

Test resilience and compliance before launching new products. Build risk models, run stress scenarios, and confirm governance structures meet FCA expectations.

Prepare for enforcement scrutiny.

Expect detailed reviews of governance, reporting, and risk management. Collect evidence that demonstrates robust systems and be ready to show auditors and regulators that your business can operate at institutional standards.

Conclusion

The FCA is shaping a more stable, transparent, and institution-ready crypto market. For firms, resilience and compliance are no longer optional; they are the price of entry. The institutions that prepare now will gain the confidence of clients, regulators, and counterparties.

At BCB Group, we welcome this shift. As a regulated provider in the UK and Europe, we support clients with compliant payment accounts, crypto trading, and safeguarding practices designed to meet the highest standards.

Please speak to our team to begin your journey with BCB Group and start the conversation about how we can help your business.