The United Kingdom’s Financial Conduct Authority (FCA) has introduced proposals to exempt cryptocurrency firms from certain traditional financial regulations, aiming to foster a competitive and innovative digital asset sector.
Announced on Wednesday, the consultation paper outlines minimum standards for crypto firms once they fall under FCA oversight.
The move aligns with Britain’s April commitment to collaborate with the United States on digital asset regulation, following the U.S.’s push to ease crypto restrictions under President Donald Trump.
The FCA seeks to balance market innovation with consumer trust and integrity.
The FCA suggests waiving four key principles for crypto trading platforms, including requirements for firms to act with integrity, exercise skill and care, prioritize customer interests, and ensure suitable advice.
“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.
These exemptions aim to allow fast-growing crypto firms to compete globally while maintaining baseline standards to inform consumer expectations, though high risks and volatility in crypto investments persist.
To counter risks highlighted by events like the $1.5 billion Bybit hack in February, the FCA proposes stricter operational resilience controls for crypto firms.
The regulator is also seeking feedback on whether the UK’s Consumer Duty, mandating positive consumer outcomes, and access to the Financial Ombudsman Service for dispute resolution should apply to the crypto sector.
With 12% of British adults owning cryptocurrencies like bitcoin or ethereum, up from 4% in 2021, the FCA’s consultation, open until November 12, aims to shape a regulatory framework that supports growth while addressing consumer risks.