FCA Opens Consultation on UK’s First Comprehensive Crypto Rulebook

Core Insights - The Financial Conduct Authority (FCA) is initiating a public consultation on comprehensive crypto regulations aimed at establishing clear standards across various crypto activities while ensuring consumer protection and fostering innovation [1][2] - The consultation will gather feedback until February 12, 2026, as the UK aims to become a global hub for digital assets, with the new regulatory regime set to be implemented in 2027 [1][5] Regulatory Framework - The proposed regulatory framework applies principles similar to traditional finance, emphasizing transparency for consumers, proportionate requirements for firms, and flexibility for innovation [2] - The consultation covers eight core areas, including admissions and disclosures, requiring firms to provide clear information to investors before they commit capital to cryptoassets [2][3] Market Integrity and Consumer Protection - Measures against market abuse will target insider trading and manipulation to ensure fair market conditions, while standards for trading platforms will enhance the safety and reliability of exchanges [3] - Intermediary requirements will clarify the responsibilities of brokers and middlemen involved in crypto transactions, and staking services must disclose risks associated with yield-generating products [3] Decentralized Finance and Prudential Requirements - The proposals extend to decentralized finance, questioning the applicability of traditional finance rules to protocols that facilitate trading and lending without intermediaries [4] - Prudential requirements will be established to help firms manage operational risks effectively [4] Government Support for Regulatory Expansion - The UK Treasury has introduced the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025, which will bring new crypto activities under FCA supervision starting in 2027 [5] - Government officials emphasize that integrating crypto into the regulatory framework is essential for maintaining the UK's status as a leading financial center in the digital age [5]