Under new proposals from the Financial Conduct Authority (FCA), crypto companies in the UK could be exempt from rules that ensure financial firms act with integrity and in the best interests of their customers.
This move follows a signal from the UK in April that it would work with the U.S. on a collaborative approach to digital assets. The U.S. has been embracing the crypto industry, with President Donald Trump vowing to roll back regulatory restrictions.
In a new consultation on minimum standards for fast-growing crypto firms to compete globally, the UK’s financial regulator is suggesting waiving four of its key principles for crypto asset trading platforms. These principles include requirements for firms to conduct business with integrity, skill, care, and diligence; to prioritize customer interests; and to ensure that advice and discretionary decisions for customers are suitable.
“We want to develop a sustainable and competitive crypto sector—balancing innovation, market integrity, and trust,” said David Geale, the FCA’s executive director of payments and digital finance. “Our proposals won’t remove the risks of investing in crypto, but they will help firms meet common standards so consumers have a better idea of what to expect.”
While crypto assets are generally high-risk and volatile, the regulator stated that customers should still be protected from poor business practices.
The FCA is also proposing stricter rules in areas like operational risk. The regulator noted that the $1.5 billion hack on cryptocurrency exchange Bybit in February highlighted the need for “strong operational resilience controls.”
The FCA is seeking feedback on whether the consumer duty, which requires firms to put their customers first, and customer access to the Financial Ombudsman Service for compensation should apply to crypto asset firms.
Charles Kerrigan, a partner and AI specialist at the law firm CMS, said it was inevitable that the consumer duty would apply once crypto assets are brought within the regulatory framework.
The government has stated that around 12% of UK adults own or have owned cryptocurrencies like Bitcoin or ethereum, up from 4% in 2021.
The deadline for feedback on the consultation is November 12.
