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FCA launches consultations
The United Kingdom’s Financial Conduct Authority (FCA) has launched a major consultation process aimed at shaping the country’s future crypto regulatory framework. Spread across three consultation papers, the proposals cover crypto trading platforms, intermediaries, staking, lending, borrowing, disclosures, market abuse and decentralized finance (DeFi).
The consultations mark a significant step in the UK government’s plan to bring digital asset markets into a formal regulatory perimeter. Industry participants, investors and stakeholders have until Feb. 12, 2026 to submit feedback, giving firms time to assess how the proposed rules could affect operations.
According to the FCA, the goal is not to eliminate risk from crypto markets but to ensure transparency, accountability and consumer understanding as digital assets continue to grow in popularity.
Focus on exchanges
One of the core pillars of the consultation is crypto trading platforms. Under the proposed framework, exchanges would be required to meet clearer standards around token admissions, disclosures and trading integrity.
The FCA is considering rules that would align crypto market structure more closely with traditional financial markets. This includes stronger safeguards against insider trading, market manipulation and conflicts of interest. Exchanges may also need to adopt clearer governance processes to ensure fair and orderly markets.
By addressing market abuse concerns, the regulator hopes to increase trust in UK-based crypto platforms and reduce the risks that have historically plagued less-regulated trading venues.
Staking and lending
Crypto staking, lending and borrowing services are also under scrutiny. The FCA is seeking feedback on how firms should disclose risks when offering yield-bearing products, particularly those that lock up customer assets for extended periods.
Staking has become a popular way for retail users to earn passive income, but it can expose customers to liquidity risks, smart contract vulnerabilities and platform failures. The regulator wants to ensure consumers clearly understand these risks before participating.
Similarly, crypto lending and borrowing platforms may face new safeguards designed to protect both lenders and borrowers. These could include enhanced disclosures, risk warnings and clearer terms around collateral, liquidation and counterparty exposure.
DeFi regulatory debate
Decentralized finance represents one of the most complex areas addressed in the consultation. The FCA is exploring whether DeFi activities — such as trading, lending and borrowing conducted without traditional intermediaries — should be subject to similar regulatory expectations as centralized financial services.
While DeFi protocols are often governed by code rather than companies, the regulator is examining where responsibility should lie, particularly when UK consumers are involved. This raises questions around developer accountability, front-end operators and governance token holders.
The FCA has emphasized that it is seeking industry input before determining how, or if, certain DeFi activities should fall under its regulatory oversight.
Consumer protection goals
Throughout the consultation papers, the FCA stresses the importance of consumer protection without stifling innovation. David Geale, the FCA’s executive director for payments and digital finance, said the regulator wants to strike a balance between enabling growth and promoting trust.
“Our goal is to have a regime that protects consumers, supports innovation and promotes trust,” Geale said, adding that feedback from the crypto industry will help shape the final rules.
The regulator also reiterated that crypto assets remain largely unregulated in the UK, aside from financial promotions and anti-money laundering requirements. Consumers are being reminded that they may not have the same protections as they do with traditional financial products.
Beyond promotions rules
The consultations represent a shift beyond the UK’s earlier focus on financial promotions and AML compliance. Until now, much of the UK’s crypto oversight has centered on marketing restrictions and registration requirements for crypto firms.
The new proposals aim to establish full “market structure” rules, similar to those governing traditional financial institutions. This would create a more comprehensive regulatory environment covering how crypto markets operate, how risks are managed and how consumers are informed.
If implemented, the framework could make the UK one of the more structured crypto jurisdictions globally.
UK crypto legislation
The FCA’s consultation follows a recent announcement from the UK government outlining plans to extend existing financial sector laws to crypto assets by 2027. The Finance Ministry has indicated that new legislation could be introduced by October 2027, formally bringing crypto companies under FCA oversight.
UK Chancellor Rachel Reeves described the move as a “crucial step” in securing the country’s position as a leading financial center in the digital age. By integrating crypto into existing financial laws, the government hopes to encourage responsible innovation while reducing systemic risks.
What comes next
With consultations open until early 2026, the UK crypto industry has a lengthy window to engage with regulators and influence the final rulebook. The outcome will likely shape how exchanges, DeFi platforms and crypto service providers operate in the UK for years to come.
As global regulators accelerate efforts to define crypto market rules, the FCA’s approach may also influence policy discussions beyond the UK, especially in jurisdictions seeking a balance between innovation and oversight.