The Financial Conduct Authority (FCA) has published three Consultation Papers (CP) setting out how a future regulatory framework for cryptoassets could operate in practice. Together, the proposals show how the UK intends to move crypto markets closer to the standards expected in traditional financial services.
While the regime is not yet final, the direction of travel is becoming easier to see. In this breakdown, we summarise the three Consultation Papers and answer what this might mean for the future of crypto firms.
Background
Until now, most cryptoasset activities in the UK have sat outside the main regulatory perimeter. The FCA’s role has largely focused on financial promotions and anti-money laundering registration.
However, that is set to change. The government has confirmed its intention to bring a wide range of crypto activities within the scope of the Financial Services and Markets Act 2000, giving the FCA broader supervisory and enforcement powers.
The three consultations published by the FCA are designed to show how that future framework could work day-to-day. They also give firms an early opportunity to shape the rules before they are finalised.
CP25/40: Rules for Cryptoasset Activities
The first consultation, CP25/40, focuses on how cryptoasset firms would be expected to operate once regulated.
CP25/40 covers trading platforms, brokers and intermediaries, as well as services such as crypto lending, borrowing and staking. The FCA proposes rules on governance, systems and controls, conflicts of interest and consumer protection.
The FCA is clear that crypto firms should meet similar standards to those applied elsewhere in financial services, while allowing for differences in technology and business models. The paper also explores how regulation should apply to decentralised finance, particularly where there is a clear party exercising control or influence.
CP25/41: Admissions, Disclosures and Market Abuse
The second consultation, CP25/41, looks at how cryptoassets are admitted to trading and how information is disclosed to investors. The FCA proposes an admissions and disclosures regime aimed at improving transparency and helping investors understand what they are buying. The focus is on clear, accurate and meaningful information, rather than promotional material.
The paper also introduces a proposed market abuse regime for cryptoassets. This would tackle risks such as insider dealing and market manipulation, supporting fair and orderly markets.
CP25/42: Prudential Expectations for Crypto Firms
The third consultation, CP25/42, addresses prudential requirements. These are the financial and operational safeguards designed to ensure firms can withstand stress and protect customers. The FCA proposes requirements covering own funds, liquidity, risk management, operational resilience and orderly wind-down planning.
The FCA’s aim is to ensure that authorised crypto firms are financially sound and able to exit the market without causing harm if things go wrong. The regime is intended to be proportionate, reflecting the range of crypto business models, while still setting clear minimum standards.
Cross-Cutting Themes Running Through the Proposals
Across all three consultations, the FCA is consistent in its message. Crypto markets are expected to meet the same regulatory outcomes as traditional finance, particularly around consumer protection and market integrity.
At the same time, the FCA acknowledges the need for proportionality and flexibility to support innovation and competition. The CPs also signal an intention to provide transitional arrangements and ongoing supervisory engagement to support firms as the new regime is implemented.
Next Steps for Firms
Taken together, CP25/40, CP25/41 and CP25/42 represent a substantial step towards a more credible, structured and consumer-focused UK crypto regulatory regime. While the framework is still subject to consultation, the direction of travel is clear and firms should begin assessing how their business models, governance and controls would align with the proposed requirements.
The FCA is consulting on the proposals before finalising the framework, and firms can respond here. Responses to the consultations are open until 12 February 2026.
If you have questions about how these proposals may affect your business or would like support on engaging with the FCA’s consultations, please contact an API Compliance consultant using the form below.
