The UK’s Financial Conduct Authority (FCA) launched a new consultation last week seeking feedback on proposals to govern how crypto firms do business in the country.
“These proposals continue our progress towards an open, sustainable and competitive crypto market that people can trust,” the regulator said. “The Consumer Duty sets appropriate standards for crypto firms by ensuring they deliver good outcomes for customers while supporting them to navigate their financial lives.”
The FCA added that while regulation should support innovation, it cannot eliminate all risks associated with crypto investing. “We want a market where innovation can thrive, but where people understand the risks,” it said.
The consultation covers a wide range of policy areas, including consumer duty obligations, redress and dispute resolution, conduct of business standards, the use of credit to purchase cryptoassets, training and competence requirements for staff, and the application of the Senior Managers and Certification Regime. It also addresses regulatory reporting, safeguarding of cryptoassets, treatment of retail collateral in crypto borrowing, and expectations around where crypto firms should be based to allow for effective supervision.
The UK's regulatory regimeUK Chancellor of the Exchequer Rachel Reeves said the move would strengthen the country’s global standing. Bringing crypto into the regulatory perimeter is a "crucial step in securing the UK’s position as a world-leading financial centre in the digital age," she said.
But the UK has also faced criticism for moving more slowly than other major jurisdictions in establishing a comprehensive crypto framework.
Industry figures warn that timing may already be an issue. Tim Meggs, co-founder and chief executive of London-based digital asset liquidity and market data firm LO:TECH, said the UK has spent years consulting while competitors acted more decisively.
“The UK has spent seven to eight years consulting while other jurisdictions implemented frameworks and attracted talent,” Meggs told Decrypt. “The question now is whether rules will arrive in time to matter.”
He also cautioned against fragmented policymaking. “Most critically, we need comprehensive regulation, not piecemeal rules." Where the EU had moved decisively on crypto policy, the UK had wasted time deliberating, he argued. "Quality matters, but so does timing. By the time comprehensive UK regulation arrives, many projects will have already gone elsewhere," he said.
The FCA is also seeking opinions around location policy guidance. In traditional finance, firms are typically required to maintain physical offices, senior management and operational control within the jurisdiction.
Applying the same model to crypto, Meggs said, risks backfiring. “DeFi protocols are difficult to locate. Who supervises code on distributed networks?” he said, warning that strict physical presence requirements could push both legal entities and development teams offshore.
A more effective approach, Meggs argued, would be to focus on transparency and monitoring rather than bricks-and-mortar requirements. Regulators could mandate access to transaction and market data regardless of where firms are incorporated, or introduce incentives—particularly tax-based—to encourage companies to maintain a UK presence voluntarily.
The Ripple effectThe regulator granted the firm both Cryptoasset Registration and Electronic Money Institution authorisation, allowing UK-based companies to use Ripple’s services for cross-border payments involving digital assets.
“The real issue isn't regulatory clarity anymore. It's UK tax policy from personal, corporate, and crypto perspectives,” Meggs said.
He argued that crypto projects would prioritize launching in jurisdictions with "better tax treatment," including Portugal, Singapore, and the Middle East. "Location policy can mandate presence," he added, "but cannot mandate that the UK is actually competitive."
