1. A New Regulatory Perimeter for Cryptoasset Activities (CP25/40)
What’s changing?
The consultation paper sets expectations across the full lifecycle of cryptoasset market infrastructure and intermediary activity:
- Cryptoasset trading platforms (CATPs)
Firms operating CATPs serving UK clients will need a UK legal entity, obtain FCA authorisation, and meet stringent requirements for governance, fair access, conflict management and systems to monitor algorithmic trading and prevent disorderly markets. - Intermediaries
Brokers and execution venues arranging or executing cryptoasset transactions will be subject to best‑execution obligations, transparency requirements, record‑keeping and client‑reporting rules—mirroring approaches in traditional financial markets. - Cryptoasset lending, borrowing, staking, and certain DeFi models
CP25/40 also outlines expectations for risk disclosure, counterparty‑risk management, operational controls for staking, and the FCA’s early thinking on how decentralised models should be assessed for governance and operational resilience.
CP25/40 operates against the backdrop of Treasury legislation that creates new regulated activities under the Regulated Activities Order (RAO) for cryptoassets. These activities will require FCA authorisation when carried on by way of business:
- Issuing qualifying stablecoins
- Safeguarding (custody) of qualifying cryptoassets and relevant specified investment cryptoassets
- Operating a qualifying CATP
- Dealing in qualifying cryptoassets as principal
- Dealing in qualifying cryptoassets as agent
- Arranging deals in qualifying cryptoassets
- Qualifying cryptoasset staking
In addition, the regime introduces two designated activities - public offers of qualifying cryptoassets and the admission of cryptoassets to trading - sitting alongside CP25/41’s proposed disclosure and market abuse framework.
Why does it matter?
2. Disclosure and Market Integrity Rules for Cryptoassets (CP25/41)
CP25/41 introduces a structured disclosure regime and, crucially, a full market abuse framework for cryptoassets admitted to trading on UK CATPs.
What’s changing?
- Disclosure rules akin to public securities markets
New requirements will apply for:- public offers of qualifying cryptoassets,
- admissions to trading, and
- qualifying cryptoasset disclosure documents (QCDDs).
- A complete market‑abuse regime
The FCA proposes prohibitions on:- insider dealing,
- unlawful disclosure of inside information, and
- manipulation and disorderly trading practices.
- Surveillance and reporting expectations
CATPs must implement surveillance systems to identify suspicious trading patterns and detect manipulation, including behaviours involving algorithmic trading.
Why does it matter?
This is the first time the UK has proposed applying established market integrity tools to cryptoassets. For firms, this means significantly enhanced monitoring obligations and potential enforcement exposure. For investors, it promises greater transparency and a more level playing field.
3. A New Prudential Regime for Crypto Firms (CP25/42)
CP25/42 sets out how the FCA intends to manage the financial resilience of cryptoasset firms.
What’s changing?
- Capital and liquidity requirements designed around crypto‑specific risks: volatility, counterparty exposure, operational failures and custody vulnerabilities.
- Operational risk standards covering technology failures, governance weaknesses, and risks arising from staking or proprietary dealing.
- Group‑wide risk considerations, requiring firms operating in global structures to demonstrate how risks arising outside the UK are managed and mitigated.
Why does it matter?
This will create a regulatory environment where firms cannot rely solely on technology or business‑model agility. Instead, they will need to build resilient, well‑capitalised, risk‑managed operations, closer to traditional financial institutions.
What Firms Should Be Doing Now
Even though these are consultation papers, they provide clear signals of where the FCA is heading. If these proposals are relevant to your firm, you should now be:
1. Assessing whether you fall within the proposed new perimeter
Particularly those operating offshore platforms or serving UK clients without a UK presence.
2. Mapping gaps in governance, systems and controls
Especially firms used to operating in lightly regulated jurisdictions.
3. Preparing for more intensive market‑abuse surveillance obligations
The expectations parallel regulated securities markets, and firms will need appropriate technology and personnel.
4. Reviewing financial resilience and prudential arrangements
Capital, liquidity and operational risk frameworks will need revisiting.
5. Engaging early with the consultation process
The FCA is accepting feedback until 12 February 2026, and you should take the opportunity to influence areas where operational challenges remain unresolved.
Final thoughts
The FCA's December package of proposals is a step change in the UK's approach to cryptoassets. It provides firms with some regulatory clarity, signalling a highly supervised environment in which governance, transparency, and stability are the price of market access. For many firms, this will mean significant regulatory uplift. Cryptoasset exchange and custodian wallet providers previously crossed the Rubicon into AML regulated territory in January 2020, with many businesses forced to withdraw registration applications under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 or see their applications delayed due to deficiencies in AML systems and controls. The full fat regulatory framework will undoubtedly have a similar effect in compelling firms to up their game. And all the while the FCA will need to tread the line between encouraging innovation and growth and ensuring the UK is a safe place to do business.
Interesting times ahead.
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