FCA’s Bold Crypto Proposal Demands Full UK Regulatory Oversight for All Firms by 2026
UK regulators just dropped a compliance bomb on crypto—and the industry's scrambling to adapt.
Total Control Timeline
The Financial Conduct Authority wants every digital asset firm under its thumb within twelve months. No exceptions, no loopholes—just full regulatory domination by 2026. They're not asking; they're demanding.
Compliance Crunch
Firms face massive operational overhauls—KYC protocols, transaction monitoring, capital requirements. The traditional finance playbook gets forced onto decentralized systems whether they like it or not.
Market Shockwaves
Expect consolidation as smaller players get squeezed out by compliance costs. The regulatory moat around crypto just got deeper—and more expensive to cross. Another classic move where oversight becomes a barrier to entry rather than protection.
Welcome to the era of regulated digital assets—where compliance costs more than innovation and paperwork might just kill more projects than market crashes ever did.
A closer look at what the FCA is proposing
The FCA’s consultation paper laid out several proposals that show how the financial watchdog intends to bring crypto firms more firmly under regulatory oversight. A central pillar is the full application of the Senior Managers and Certification Regime, which will impose clear accountability on individuals leading crypto firms, a direct response to the industry’s historical opacity.
Firms will also be expected to meet stringent operational resilience standards, mandating robust systems to withstand cyberattacks, outages, and other operational shocks that have previously led to significant consumer losses.
The FCA has also opened a crucial debate on applying its flagship Consumer Duty to crypto activities. This WOULD legally obligate firms to deliver good outcomes for retail customers, a potentially transformative shift from the current caveat emptor environment.
Tied to this is a consultation on integrating cryptoasset disputes into the Financial Ombudsman Service, which would provide a formal, independent redress mechanism for the first time. The FCA itself acknowledges that the inherent volatility of cryptoassets will remain, but these measures aim to insulate consumers from poor business practices and outright fraud.
“We want to develop a sustainable and competitive crypto sector – balancing innovation, market integrity and trust. Our proposals won’t remove the risks of investing in crypto, but they will help firms meet common standards so consumers have a better idea of what to expect,” David Geale, FCA’s executive director of payments and digital finance, said.
The coming consultation period will be a critical test, revealing whether the industry is prepared to operate with the rigor of traditional finance or if it will resist the very structures it has long claimed to seek.
