FCA drafts more UK crypto regulation

Swiftly following the release of the UK’s cryptoasset legislation, the Financial Conduct Authority has opened three consultations on the rules that will apply under the incoming crypto regulatory regime. The deadline for responding is 12 February 2026.

CP25/40: Regulating cryptoasset activities

This consultation proposes rules for newly regulated activities relating to cryptoasset trading platforms (CATPs), intermediaries, lending, borrowing and staking. The FCA has responded to feedback raised in response to its discussion paper 25/1 earlier this year.

Points of interest include:

• Incorporation: As proposed in DP25/1, CATPs servicing UK retail consumers will generally need to be authorised in the UK. This would require a UK subsidiary but, in some circumstances, the FCA may accept branch structures to allow access to global liquidity pools.

• Access: CATPs will need to implement non-discriminatory rules for platform access and operation. CATPs will need to identify and monitor market makers but will not necessarily need to have contractual arrangements in place with them, as had previously been mooted.

• Conflicts: Relaxing its proposals in DP25/1, the FCA suggests that CATPs may perform some principal dealing activities and may allow admission of its own tokens provided, in each case, that certain controls are applied to manage conflicts of interest.

• Personal account dealing: The core rules in COBS 11.7 on dealing by employees will be replicated under the FCA’s crypto regime.

• Transparency: Rather than apply pre- and post-trade transparency requirements for all CATPs, the FCA will only do so for larger firms. The regime will allow for waivers and deferrals of publication.

• Intermediaries: The FCA proposes best execution rules that mirror COBS 11.2A standards, requiring firms to take all sufficient steps to obtain the best possible results for clients when executing orders for them in cryptoassets and considering factors such as cost, speed and likelihood of execution.

• PFOF: The FCA has kept its plans to restrict intermediaries from engaging in payment for order flow. This is on the basis that firms would not be able to satisfy the FCA’s requirements on conflicts, best execution and inducements.

• Lending: In DP25/1 the FCA mooted restricting firms from offering cryptoasset lending and borrowing services to UK retail consumers. The draft rules in CP25/40 now allow these services if certain standards are met, such as information requirements and express prior consent to key terms. Crypto lenders would not need to conduct creditworthiness assessments.

• Staking: The FCA is retaining its plan to require firms to get express prior consent before every staking instruction. It has also proposed rules requiring firms to provide information about the risks of staking and keep detailed records about, for example, rewards, fees and losses due to operational disruption.

• DeFi: The FCA does not plan to introduce specific rules for decentralised models. Crypto activities that are truly decentralised will fall outside the scope of the UK’s regulatory perimeter. Otherwise, where there is an identifiable controlling entity, the FCA’s crypto regime will apply. The FCA will consult separately on indicators of decentralisation and guidance for mitigating operational and financial crime risks.

CP25/41: Admissions & disclosures and market abuse regime for cryptoassets

This consultation picks up themes from discussion paper 24/4.

Points of interest include:

• Gatekeeping: The FCA proposes requiring CATPs to set risk-based and objective admission criteria. They would be expected to reject cryptoassets likely to be detrimental to retail investors, for example due to fraud, misconduct or governance or technical arrangements that could enable manipulation. CATP boards must approve their admission criteria and keep them under review. The criteria will be made public but CATPs would not be required to publish individual rejection decisions.

• Due diligence: CATPs must conduct due diligence on the cryptoasset before admission. They must also satisfy themselves that qualified cryptoasset disclosure documents (QCDD) meet legislative requirements and are true and not misleading. The FCA expects CATPs to, for example, check whether the identities of key persons are credible, assess whether the claimed features of the cryptoasset are consistent with the underlying code or observable behaviour, and check whether disclosures about token supply are supported by on-chain data.

• QCDD exceptions: CATPs may only admit cryptoassets if a QCDD has been prepared and published but exceptions may apply, for example in relation to UK-issued qualifying stablecoins or where only qualified investors can trade in the cryptoasset.

• SDD: CATPs must require supplementary disclosure documents (SDD) if there is a significant new factor, material mistake or material inaccuracy relating to the information included in a QCDD.

• Liability: Responsibility for the disclosure documents generally sits with the applicant, or the CATP if admitting on its own behalf. Voluntary protected forward-looking statements can qualify for a modified liability standard if content and placement criteria are met.

• Stablecoins: In addition to the website disclosure requirements on UK issuers of qualifying stablecoins under CP25/14, in CP25/41 the FCA proposes rules for stablecoin QCDD disclosures. CATPs may not reject based on QCDD quality and should notify the issuer and the FCA if they do so.

• MARC: The legislative framework applies concepts under the UK’s market abuse regime to cryptoassets to prohibit insider dealing, unlawful disclosure and market manipulation, and require public disclosure of inside information about relevant qualifying cryptoassets admitted to trading on a CATP. The FCA’s market abuse regime for cryptoassets, known as MARC, supplements the legislation. For example, MARC specifies who is responsible for disclosing inside information, provides for safe harbours and exceptions for legitimate behaviour, and imposes requirements on CATPs and intermediaries to monitor orders and transactions. The FCA proposes imposing additional obligations on large CATPs, such as monitoring of on-chain activity.

CP25/42: A prudential regime for cryptoasset firms

Earlier this year the FCA proposed capital requirements for cryptoasset firms. The latest consultation paper proposes additional aspects for the incoming regime. Table 1 in CP25/42 summarises the split across the two consultations.

Points of interest include:

• Recap: The proposed framework comprises two sourcebooks: COREPRU (cross-cutting principles) and CRYPTOPRU (sector-specific rules). Crypto firms would be required to calculate their own funds requirement as the highest of three components: permanent minimum requirement (PMR), fixed overhead requirement (FOR), or K-factors.

• PMR: CP25/42 suggests PMRs according to different activities. For example, £75,000 for arranging or dealing as agent, £150,000 for operating a CATP or providing staking services, and £750,000 for dealing as principal. Where a firm conducts multiple activities, the highest applicable PMR applies.

• Operational K-Factors: The K-factor capital requirements for client cryptoasset orders (K-CCO), trading flow (K-CTF) and clients’ cryptoassets staked (K-CCS) are designed to cover operational risks.

• Exposure K-Factors for principal dealers: The FCA proposes applying additional K-factors to cryptoasset firms that trade in their own name. These are K-NCP (market risk on trading book), K-CCD (counterparty credit default on non-spot exposures such as lending) and K-CON (risk of concentrated exposures to a single client or group of connected clients).

• Overall risk assessment: Under COREPRU, cryptoasset firms would need to operate systems and controls to identify, monitor and mitigate risks that may cause material harm. Firms must forecast their capital and liquidity needs, plan for recovery action and wind-downs, and assess the adequacy of own funds and liquidity requirements. Depending on the outcome of its risk assessment, firms may need to hold additional financial resources. The FCA will hold firms’ senior management responsible for making sure the overall risk assessment meets the expected standards.

• Disclosures: The FCA proposes that firms should publicly disclose information about risk management, own funds, own funds requirements and group arrangements. This would include breakdowns of PMR, FOR and K-factors, with K-CCD by counterparty type and K-NCP by asset category, alongside the firm’s own funds threshold requirement and liquid asset threshold requirement. Principal dealers must also provide financial information relating to their ultimate parent undertaking.

Next steps

All three consultations close on 12 February 2026. The FCA plans to finalise the rules for its cryptoasset regulatory regime later in 2026. The regime will come into effect on 25 October 2027.

Before then, the FCA will consult further on aspects of its rulebook. These will cover, for example:

• The application of FCA Handbook requirements, including the Consumer Duty, Conduct of Business Sourcebook and access to the Financial Ombudsman Service

• Additional location policy guidance for international cryptoasset firms

• Guidance on the application of the rulebook to DeFi.