UK future crypto framework: FCA Consultation Paper on Regulating Cryptoasset Activities (CP25/40)

Its approach reflects the FCA's familiar design principle: "same risk, same regulatory outcome" tailored to crypto-specific risks and focuses on consumer protection, market integrity, innovation and international competitiveness. The proposals are part of a broader roadmap for the regulation of cryptoasset activities made alongside publication of the draft Financial Services and Markets Ac 2000 (Cryptoassets) Regulations 2025, which expands the FCA’s remit to new cryptoasset activities. It should also be read alongside CP25/41 (admissions and market abuse) and CP25/42 (prudential requirements). Comments on CP25/40, CP25/41 and CP25/42 are due by 12 February 2026. 

High-level overview

The CP proposes that firms operating cryptoasset trading platforms (CATPs) in the UK or serving UK consumers must have FCA authorisation and a UK presence, with flexibility for combinations of UK entities and branches, assessed case-by-case at the authorisation gateway. CATPs would be required to set non-discriminatory order execution rules and objective access criteria, supported by robust systems and controls, and to monitor compliance and have mechanisms to halt trading if needed. Platforms must identify, monitor and disclose market-maker incentive arrangements and other liquidity programmes, and keep records of oversight. Rather than prescriptive algorithmic trading rules, the FCA proposes a principles-based approach requiring CATPs to set, monitor and publicly disclose rules and thresholds for algorithmic and automated trading, commensurate with platform capacity and risk.

Retail market access and intermediaries

Retail investors would only be able to trade assets admitted on a UK CATP that have a qualifying cryptoasset disclosure document (QCDD). The FCA proposes that CATPs direct any UK retail user intending to deal in an asset to the relevant QCDD before order placement. UK‑issued qualifying stablecoins do not require admission to trading to be accessible to the public, but will have a separate issuer‑prepared QCDD, which must be lodged on an FCA repository; CATPs may admit such stablecoins to trading by signposting that QCDD.

For intermediaries (brokers, dealers, arrangers), the FCA proposes COBS-aligned best execution standards and tailored guidance, including guidance that firms should, where available, check pricing against at least three reliable price sources from UK-authorised execution venues (e.g. a CATP or principal dealer), with defined exemptions. Intermediaries executing orders or receiving and transmitting orders for clients must ensure orders are executed on a UK qualifying executing venue. Retail services may only be offered in assets with a QCDD and UK admission, subject to narrow exceptions (e.g. where an arranger sells on the condition of future UK admission with a QCDD available, and limited carve-outs where tokens are withdrawn from admission or for UK-issued qualifying stablecoins). Payment for order flow is prohibited, personal account dealing rules will be replicated in the CRYPTO sourcebook and will apply to intermediaries. Intermediaries will also face pre- and post-trade transparency (for principal dealers above a size threshold), enhanced record-keeping and tailored client reporting requirements.

Lending and borrowing

For lending and borrowing, the FCA proposes a guardrail-based regime rather than an outright retail ban. Firms must provide clear, durable information on services, risks and key terms, and obtain express prior consent for each engagement. The FCA proposes to prohibit the use of proprietary tokens in connection with lending and borrowing services (e.g. as collateral or for incentives). They also propose retail risk limits including for collateralised borrowing so that retail losses are not excessive and cannot exceed dedicated collateral. The FCA is not proceeding with earlier ideas to apply parts of its Consumer Credit Sourcebook (CONC), including a requirement to assess creditworthiness, and will consult separately on certain settlement-related requirements.

Staking

Staking providers are expected to give retail customers durable pre-contractual information, secure express consent to key terms for each staking instance, maintain comprehensive records, and comply with operational resilience, record-keeping and prudential requirements. The FCA has dropped an earlier proposal to mandate compensation for losses from preventable operational or technological failures, but will impose explicit information, consent and record‑keeping requirements and apply cross‑cutting standards (with safeguarding proposals to follow).

DeFi

For DeFi, the FCA intends to apply the same rules where there is an identifiable controlling person(s), with further guidance on assessing control to follow. The FCA will consult separately on DeFi guidance covering indicators of control/(de)centralisation and good practice for mitigating operational and financial crime risks when interacting with highly automated or decentralised arrangements.

Market structure and transparency

On market structure, the FCA proposes to permit certain principal dealing by a legal entity operating a CATP and its affiliates, subject to strict conflict controls. For CATPs and intermediaries dealing as principal, pre-trade transparency obligations are to be limited to larger firms using a £10 million annual revenue threshold, whilst post-trade transparency and enhanced transaction records and client reporting will apply more broadly.

Next steps

The consultation closes on 12 February 2026. The FCA expects to publish policy statements with finalised rules in 2026 as part of its Crypto Roadmap and signals further consultation in Q1 2026 on Handbook requirements (including the Consumer Duty, COBS and access to the Financial Ombudsman Service), detailed location policy guidance for international and staking firms, and settlement-related requirements for CATPs and intermediaries.