On 26 November 2024, the Financial Conduct Authority (FCA) published a press release, blog and roadmap providing an update on its plans for regulating cryptoassets.

Increasing use of cryptoassets

In the press release, the FCA notes that, according to its latest research on consumer attitudes and behaviours towards cryptoassets, ownership is continuing to rise with 12% of UK adults now owning cryptoassets, up from 10% in previous findings. Awareness of cryptoassets was also found to have increased from 91% to 93.

The FCA’s direct of payments and digital assets, Matthew Long, said that the findings highlight the need for clear regulation that supports a safe, competitive, and sustainable cryptoasset sector in the UK. He added that the FCA wants to develop a sector that embraces innovation and is underpinned by market integrity and consumer trust, and that it is committed to working closely with the Government, international partners, industry and consumers to ensure it gets the future rules right.

Progress made in developing the approach to cryptoasset regulation

The blog outlines some of the key areas discussed during the FCA’s series of roundtables earlier this year, which aimed to gather views to help shape how the FCA approaches regulating specific areas of cryptoassets. The roundtables were attended by over 100 organisations involved in the industry, as well as Government officials, academics and other regulatory authorities, plus the US Securities and Exchange Commission which also shared its views.

Topics discussed included:

  • Admissions and disclosures: The FCA flagged that this is a crucial aspect of the proposed new cryptoasset regime and will be fundamental to investor protection as it allows people to make informed decisions. Participants in the discussions were keen on the idea of an industry-led admissions and disclosures regime that was proportionate and tailored to different business models, like institutional and retail. They also warned that compliance with some disclosure and due diligence requirements could be more challenging where cryptoassets are decentralised, and it would be necessary to rely on publicly available information.
  • Market abuse regime: Whilst the FCA acknowledges that market abuse can manifest in crypto markets in novel and distinct ways, giving rise to new challenges for firms, governments and regulators, it is aiming to achieve the same outcomes wherever possible when it comes to a crypto version of market abuse regulation. Discussions highlighted the importance of considering the international context of crypto market abuse (including challenges posed by data privacy laws across jurisdictions) and there were varying views on how to appropriately account for decentralised cryptoassets, particularly around disclosures of important information.
  • Trading platforms and intermediaries: The FCA is aiming to create a regime that puts in place strong systems and controls to enable fair, orderly, transparent and efficient trading. Topics discussed included location policy, operational resilience requirements, conflicts of interest and matching and order execution.

The FCA confirmed that while there is still work to be done and further engagement planned with stakeholders in relation to the future regime, it is already making progress in some of the areas discussed during the roundtables. For example, it is leading the implementation of international crypto regulatory standards via its leading role in the International Organization of Securities Commissions, and is working with industry and HM Treasury to help shape an industry-led market abuse information sharing platform.

Roadmap

The ‘Crypto Roadmap’ published by the FCA outlines its planned policy publications for cryptoassets where it is seeking feedback and the content they are expected to cover. The planned publications include:

  • In Q4 2024, a discussion paper (DP) on admission and disclosures and market abuse.
  • In Q1/Q2 2025, (i) a DP covering trading platform rules, intermediation, lending rules, staking and prudential considerations, and (ii) a consultation paper (CP) covering rules on stablecoins, custody and prudential aspects.
  • In Q3 2025, (i) a CP on conduct and firm standards for all Regulated Activities Order activities, and (ii) a CP on admissions and disclosures and market abuse (to follow up on the Q4 2024 DP).
  • In Q4 2025/Q1 2026, a CP on trading platforms, intermediation, lending and staking, as well as the remaining material for the prudential sourcebook.
  • In 2026, all policy statements and final rules are expected to be published, with a period allowed after that for firms to prepare before the application gateway opens and the regime goes live.

The FCA notes that the roadmap is not exhaustive and that all timelines are subject to change depending on parliamentary time and/or further steers from the Government.