The UK Financial Conduct Authority (FCA) has confirmed a major regulatory shift that will impact the country’s cryptocurrency sector. In a recent consultation paper, the regulator announced that crypto firms will be allowed to operate under simplified rules, acknowledging that traditional financial frameworks cannot be directly applied to digital assets. While the full integration of crypto into the UK’s financial system is planned for 2026, the FCA is taking a more pragmatic approach by tailoring regulations to the unique risks and technologies of cryptocurrencies.
According to David Geale, FCA’s Executive Director for Payments and Digital Finance, simply copying rules from the banking and investment world into the crypto space would be ineffective. Instead, the guiding principle will be: “same risk, same regulatory outcome.” However, Geale stressed that significant differences in technology and market structure must be recognized.
For the past five years, UK-based crypto companies have been required to register with the FCA to comply with anti-money laundering, counter-terrorism financing, and Know Your Customer (KYC) requirements. Now, the regulator is moving to the next stage—creating a dedicated regulatory framework for digital assets. Some principles, such as the obligation to “act with integrity” or “exercise due diligence and care,” will not fully apply to crypto platforms. Similarly, requirements for internal management and governance will be less strict compared to banks or investment firms.
The FCA also highlighted that due to the volatile nature of crypto assets, firms will not need to provide customers with a “cooling-off period” or the right to cancel purchases. Moreover, blockchain and distributed ledger technology (DLT) will not be classified as outsourcing, which exempts it from certain risk management rules.
However, the regulator is tightening controls in another critical area: cybersecurity and operational resilience. Following the massive Bybit wallet hack that resulted in $1.5 billion in losses, the FCA emphasized that all crypto companies must maintain robust systems to ensure operational continuity. “If you market yourself as a 24/7 business but cannot sustain it, that’s a serious issue,” Geale warned.
In addition, the FCA is considering extending consumer protection measures, such as granting crypto users the right to file complaints with the Financial Ombudsman Service. The regulator insists that transparency and risk awareness are key, warning investors that crypto remains a high-risk market where losses can be total. Still, the FCA acknowledges that digital assets also present opportunities for growth and innovation in the UK’s financial ecosystem.
With new tax reporting obligations set to begin in January 2026, requiring crypto firms to disclose user transactions to tax authorities, the UK is positioning itself as one of the most comprehensive regulatory environments for digital assets in Europe. The balance between innovation and protection will define how the UK crypto market evolves in the years ahead.
