UK’s FCA Proposes Tighter Crypto Regulations to Mitigate Market Risks

The Financial Conduct Authority (FCA), the UK’s financial regulatory body, has proposed implementing stricter regulations on the cryptocurrency market. This move aims to mitigate risks associated with digital assets and could result in banning unlicensed companies from issuing public cryptocurrency offers.

Proposed Regulatory Measures

The FCA released a discussion paper on December 16 , outlining plans to prohibit non-regulated entities from conducting public crypto offerings. The proposed measures are designed to ensure that cryptocurrency-related promotions comply with established financial laws and prioritize consumer protection.

According to the FCA, the proposed regulations include requiring authorized firms, such as licensed crypto trading platforms , to share information and implement robust monitoring systems to detect and prevent suspicious activities. “We are also suggesting certain firms, like authorized crypto trading platforms, share information with each other to help stop suspected market abuse,” stated the FCA.

Recent FCA Actions and Warnings

To refine these proposed measures, the FCA has invited feedback from the public and industry stakeholders. The consultation period is open until March 2025. This initiative forms part of a broader effort to establish a comprehensive regulatory framework for the UK’s cryptocurrency market by 2026.

The FCA has already taken steps to enforce its regulatory authority. On December 3, the regulator restricted access to Pump.fun, a platform suspected of offering unauthorized financial services. The FCA warned that such platforms could pose significant risks to UK consumers.

Existing Crypto Regulations in the UK

The FCA’s recent proposals build on earlier regulations introduced in 2023, which banned unregistered crypto companies from marketing or promoting their services to UK residents. Since 2020, the FCA has closely monitored compliance with anti-money laundering (AML) regulations in the cryptocurrency sector.

Market Risks and Global Context

A recent industry report highlighted that the UK ranks among the top countries affected by crypto scams and failed projects, accounting for 7% of global crypto-related scams between January 2022 and October 2024. The report emphasized that rapid market expansion in regions like the UK often creates opportunities for fraudulent schemes, underscoring the need for stringent regulatory frameworks.

The UK government sees these proposed crypto regulations as vital to fostering a safer investment environment. According to the FCA, the new rules are intended to “set out proposals for firms to introduce strong controls that prevent harm.”

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