Regulating crypto - next steps on the FCA's crypto roadmap

In January 2025, we published our Emerging Themes analysis of the UK and US cryptoasset regulation.  In short, crypto regulation has not kept pace with the growth of crypto itself.

However, in the past few days, we have reached two regulatory milestones in the UK on the crypto roadmap - with more to come.

Draft Cryptoassets Order 2025

On 29 April 2025, the Treasury published the draft Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, with the proposed provisions to create a new regulatory regime for cryptoassets.  The proposals define and classify “qualifying cryptoassets” and “qualifying stablecoin” as specified investments and bring specified activities in those assets as regulated activities, i.e. requiring FCA authorisation.  Notably, however, truly decentralised finance (DeFi) crypto firms and overseas stablecoin issuers are exempt.  Technical comments are due by 23 May 2025.

The accompanying Press Release also revealed UK-US collaboration on digital assets, including use of the upcoming UK-US Financial Regulatory Working Group to continue engagement.

Fintech will be a priority sector in the hotly-anticipated inaugural Financial Services Growth and Competitiveness Strategy, due to be published on 15 July alongside the Chancellor's Mansion House speech.

FCA Discussion Paper 25/1: Regulating Cryptoasset Activities

Building on the above, FCA DP25/1 invites stakeholder feedback on its proposed regulatory framework for cryptoassets. The paper sets out proposals for the regulation of cryptoasset trading platforms, intermediaries, staking arrangements, lending and borrowing practices, DeFi, and the use of credit in the purchase of cryptoassets.

Launching DP25/1, the FCA states:

We want to develop a safe, competitive, and sustainable cryptoasset sector. Long-term confidence in cryptoassets depends on clear regulation to promote market integrity and appropriate consumer protection.

DP25/1 covers:

• Cryptoasset trading platforms
• Cryptoasset intermediaries
• Cryptoasset lending and borrowing
• Restricting the use of credit to purchase cryptoassets
• Staking
• DeFi

Responses are due by 13 June 2025 and the FCA will consult further on its proposals if (when) it plans to adopt them as final rules.

What next on the crypto roadmap?

Before the summer, the FCA will launch its consultations on:

• Proposed rules and guidance for issuing a qualifying stablecoin, safeguarding qualifying cryptoassets, and specified investment cryptoassets.
• Prudential framework for cryptoassets and prudential requirements for qualifying stablecoins and safeguarding.

So watch this space…