FCA Seeks Balance Between Innovation and Investor Protection
The UK Financial Conduct Authority (FCA) has taken a major step toward formal crypto regulation. In a new consultation paper released this week, the FCA laid out proposals for applying traditional finance (TradFi) rules to crypto companies — and possibly waiving some of them.
“We want to develop a sustainable and competitive crypto sector, balancing innovation, market integrity and trust,” said David Geale, FCA’s executive director of payments and digital finance.
The proposals come in response to His Majesty’s Treasury’s draft crypto legislation published in April 2025, which aims to align exchanges, brokers, and agents with existing TradFi standards.
Key TradFi Rule Under Review: Consumer Duty
One of the most significant questions the FCA is posing:
Should Consumer Duty apply to crypto firms?
The rule currently requires financial firms to deliver “good outcomes” for consumers, ensuring transparency, fairness, and suitability of products.
The FCA wants public input on whether this rule should be applied as-is to crypto or customized for digital asset markets. Feedback is open until October–November 2025, with final rules expected in 2026.
Other Discussion Points in the Consultation
- 🔐 Operational Resilience: Should crypto firms follow TradFi-style disaster recovery, data protection, and uptime rules?
- 🧼 Anti-Financial Crime Controls: How should compliance standards be tailored for on-chain environments?
- 📬 Dispute Resolution: Should crypto users be able to take complaints to the UK Financial Ombudsman Service?
The FCA wants to avoid overregulation but ensure clear consumer protections as crypto moves into a regulated space.
UK Aligns With US on Crypto Strategy
The UK is also looking to coordinate crypto oversight with the United States. According to the Financial Times, UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent are working on frameworks for joint crypto cooperation.
Companies involved in the ongoing discussions reportedly include:
- 🇺🇸 Coinbase, Circle, Ripple
- 🇬🇧 Barclays, HSBC, Bank of America, Citi
This signals growing momentum behind a transatlantic crypto policy push — one that could give regulated crypto firms clear market access and investor protection rules.
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