The FCA’s new consultation (CP25/25) is a further step toward formalising the UK’s approach to regulating cryptoasset activities. The FCA’s oversight of cryptoasset Service Providers will expand well beyond its previous focus on financial crime and promotions. The proposals bring these firms under much broader, established FCA standards, aiming to raise governance, operational resilience, consumer protection, and business conduct in crypto markets.
Key Points of the Consultation
- When legislation proposed by the Treasury comes into force, firms such as crypto exchanges, custodians, issuers of stablecoins, and staking providers will not only be supervised for anti-financial crime controls and financial promotions but also for a wide range of regulatory obligations, including but not limited to systems and controls, governance, prudential standards, and operational resilience.
- The consultation details how key elements of the FCA Handbook will apply to cryptoasset firms (such as High-Level standards including the Senior Management Arrangements, Principles for Businesses, Code of Conduct, Fit and Proper test, FIT; ESG; and Supervision manual, SUP), mirroring requirements on traditional finance firms as much as possible.
- Crypto firms will be assessed against “Threshold Conditions” for authorisation and ongoing compliance, and the FCA is looking to apply a proportionate and risk-based approach to supervision and enforcement to deter misconduct.
- The FCA proposes that SM&CR will be applied to all firms engaging in cryptoasset activities, with some adjustments to the SMCR classification so that crypto firms can fall under the enhanced criteria when applicable.
- The FCA also intends to apply the operational resilience requirements to all crypto firms to help safeguard against attacks and outages and strengthen third-party reliance oversight.
- CP25/25 features two Discussion Elements as the FCA is seeking feedback on –
- whether to extend consumer access to the FOS for redress, and how Consumer Duty can best apply to crypto firms.
- How conduct of business and product governance rules can be most effectively applied to crypto firms.
The alignment of standards with traditional finance aims to encourage responsible innovation and make the UK a more attractive and competitive market for regulated crypto business.
Overall, this approach should reassure consumers that crypto firms will be held to standards familiar in the broader financial sector, making the FCA’s oversight more meaningful and broad-based.
Opinions on the discussion papers must be submitted by 15 October 2025, and the consultation period closes on 12 November 2025.
