The United Kingdom is stepping up efforts to regulate cryptocurrencies with a plan for full implementation by 2026. On November 26, 2024, the Financial Conduct Authority (FCA) unveiled a roadmap designed to integrate crypto firms into the traditional financial system.
Key Features of the FCA’s Crypto Framework
The FCA’s regulatory blueprint outlines several initiatives to strengthen oversight and foster trust in the digital asset sector:
- Capital and Insider Trading Rules: New capital requirements and insider trading regulations will hold crypto businesses to the same standards as traditional financial institutions.
- Market Abuse Guidelines: A discussion paper on market abuse and the disclosure of inside information is scheduled for late 2024.
- Execution and Custody Standards: In early 2025, the FCA will address order handling, trade execution, custody, and a prudential rulebook that covers capital, liquidity, and risk management.
- Consumer Protection Enhancements: By the third quarter of 2025, rules from the Consumer Duty and Senior Managers and Certification Regime will be tailored for digital asset firms.
The FCA aims to fully implement these measures by 2026, setting a high standard for the crypto sector.
FCA’s Vision for the Crypto Industry
Matthew Long, FCA’s Director of Payments and Digital Assets, emphasized the importance of clear regulations to support innovation while ensuring consumer trust. “We want to develop a sector that embraces innovation and is underpinned by market integrity and consumer trust,” he stated.
This plan reflects the UK’s broader ambition to become a global leader in digital assets, despite delays caused by the country’s recent general election.
Comparing Global Approaches
The UK’s regulatory roadmap follows the European Union’s Markets in Crypto-Assets (MiCA) regulation, which takes effect on December 30, 2024. Meanwhile, the United States is signaling a more relaxed approach under President Donald Trump, who has proposed creating a national bitcoin reserve to enhance the country’s crypto leadership.
Building Capacity for Crypto Oversight
To manage the growing number of applications from crypto firms, the FCA has expanded its crypto team to over 100 members. However, the approval process remains slow, reflecting the FCA’s rigorous evaluations to ensure compliance.
The UK’s commitment to regulating cryptocurrencies by 2026 highlights its dual focus on fostering innovation and protecting consumers. By aligning crypto regulations with traditional financial standards, the country aims to create a secure and competitive digital asset ecosystem.
