The Financial Conduct Authority (FCA) recently published a number of items related to crypto and digital asset regulation in the UK. In summary:
- the FCA crypto roadmap (the FCA Crypto Roadmap) setting out planned FCA policy publications for cryptoassets;
- a webpage on cryptoasset Financial Promotions and fiat-to-crypto on/off ramp services;
- a research note showing rising crypto ownership in the UK and consumers’ attitudes and behaviours towards crypto; and
- the FCA’s approach to developing crypto regulation outlined in their blog.
This Client Alert focuses on the FCA Crypto Roadmap and regulatory approach, including the proposed timeline of events for crypto firms to consider in 2025 and 2026.
1. FCA Crypto Roadmap
The FCA Crypto Roadmap sets out the FCA’s detailed timeline for making cryptoassets a fully regulated asset class in the UK by 2026.
The process will begin with discussion papers on market abuse as well as admission and disclosures during Q4 2024, with further discussion papers and consultation papers throughout 2025 and into 2026. The roadmap finishes with the publication of final policy statements and the opening of the regulatory gateway in 2026.
The publication of the FCA Crypto Roadmap follows a speech made by Tulip Siddiq, the Economic Secretary to the Treasury on 21 November 2024 in which she announced that the Labour government intends to proceed with the previous government's proposals to regulate cryptoassets.
Rather than rolling out the regime in two phases as originally anticipated, the government intends to implement the new regime for stablecoins and other cryptoassets at the same time, and it has scrapped plans to bring stablecoins into UK payments regulation.
The government says it will consult on draft legislation as soon as possible in 2025. It also plans to clarify some existing legal uncertainty by confirming that cryptoasset staking services do not constitute a collective investment scheme under financial services law.
The provisional timeline based on the FCA Crypto Roadmap is as follows:
Q4 2024
1. Discussion Papers
- Admissions and disclosures: admission/rejection policies, disclosures, liability, due diligence, National Storage Mechanism
- Market abuse: systems and controls, information sharing, inside information disclosure.
Q1 / Q2 2025
2. Discussion Papers
- Trading platform rules: including location, access, matching, and transparency requirements
- Intermediation rules: including order handling and execution requirements
- Lending rules: including ownership, access and disclosures
- Staking: including ownership and disclosures
- Prudential: considerations for cryptoasset exposures
3. Consultation Papers
- Stablecoins: backing assets, redemption processes
- Custody: recordkeeping, reconciliations, segregation of assets, and use of third parties
- Prudential: introduction of a new prudential sourcebook, including capital, liquidity and risk management
Q3 2025
4. Consultation Papers
- Conduct and firm standards for all Regulated Activities Order activities: systems and controls including operational resilience and financial crime, consumer duty, complaints, conduct (COBS), and governance including Senior Managers and Certification Regime (SMCR)
- Admissions and Disclosures
- Market Abuse
Q4 2025 / Q1 2026
5. Consultation Papers
- Trading platforms, intermediation, lending and staking
- Remaining material for prudential sourcebook: Groups and Reporting
2026
6. Final Rules - all Policy Statements published
7. Gateway readiness and opening
8. Regime go-live
The full FCA Crypto Roadmap is set out below.
2. FCA’s Approach to Regulation
The FCA’s recent publications and activities highlight that the regulator is taking a measured, consultative approach to developing the UK's crypto regulatory framework, balancing the need to protect consumers and market integrity while supporting innovation in the digital assets sector. Some key themes emerge from the recent updates.
Retail Protection
The FCA's latest research shows increasing crypto adoption in the UK, with 12% of UK adults now owning crypto assets (up from 10%) and average holdings increasing to £1,842.
Since October 2023, the FCA has taken significant enforcement action in the financial promotions space, including issuing 1,702 alerts and taking down over 900 scam crypto websites and 50 apps.
This demonstrates the UK regulator's commitment to protecting retail investors while supporting the development of a legitimate crypto sector.
Industry Engagement
The FCA has engaged extensively with industry stakeholders through roundtables bringing together over 100 organisations including crypto exchanges, banks, trading firms, blockchain analytics companies, and regulators. The FCA is taking a leading role in implementing international crypto regulatory standards through its work with IOSCO and is developing an industry-led market abuse information sharing platform.
Expectations for Regulated/Registered Firms
The FCA has expressed serious concerns about regulated firms providing services to unregistered cryptoasset businesses that may be illegally promoting to UK consumers. Of particular focus are MLR-registered firms and payment service providers offering fiat-to-crypto on/off ramp services through APIs or widgets embedded in unregistered firms' platforms.
The FCA warns that such arrangements could expose regulated firms to significant risks, including potential breaches of the Proceeds of Crime Act 2002 if they receive benefits from illegal financial promotions.
Regulated firms are expected to conduct thorough due diligence on crypto partners and implement robust control frameworks to prevent, detect, and address non-compliance.
3. Implications for Clients
The comprehensive regulatory timeline presents both opportunities and compliance challenges for crypto businesses. UK-based firms will need to prepare for significant operational changes across areas including financial promotions, custody arrangements, prudential requirements, and conduct standards.
Overseas firms targeting UK customers will need to carefully assess their business models against the new requirements, particularly regarding financial promotions and the provision of services to UK retail clients.
The FCA Crypto Roadmap sets a clear programme for comprehensive and complex regulatory change for the crypto sector. Firms will face significant strategic decisions in the year ahead.
About LawBEAM
LawBEAM's leading crypto team has extensive experience helping firms navigate complex legal and regulatory change. We represent UK and international crypto firms and advise on legal and regulatory strategy that positions our clients for success in the UK market.
Please get in touch should you wish to discuss or have any questions about how these latest developments may affect your business.
