The Financial Conduct Authority (FCA) has released a discussion paper titled “Regulating Cryptoassets: Admissions & Disclosures and Market Abuse Regime for Cryptoassets“, detailing its proposed approach to regulating the growing cryptoasset market. This initiative forms part of a broader effort by the government to introduce a comprehensive financial services regime for cryptoassets, bringing these activities under the FCA’s oversight.
Building on the Treasury’s earlier consultation and response, the government has opted to legislate for all cryptoasset activities simultaneously, including fiat-referenced stablecoins, crypto trading, and exchanges, rather than adopting the previously proposed phased approach. The FCA’s paper focuses on two critical areas: the market abuse regime for cryptoassets (MARC) and the admissions and disclosures regime (A&D), which aim to enhance market integrity, improve transparency, and address risks while fostering innovation.
The proposals are underpinned by strategic objectives, including consumer protection, maintaining the integrity of the market, encouraging effective competition, and supporting the UK’s international competitiveness and economic growth. By providing clarity and safeguards at the admission gateway, the FCA intends to reduce harm, improve decision-making for market participants, and create a fairer, more accessible cryptoasset market.
Extensive industry engagement has informed the proposals, with roundtables and consultations helping shape the FCA’s approach. These efforts have also been supported by international collaboration, as the FCA works with organisations such as IOSCO and the Financial Stability Board (FSB) to align UK regulations with global standards. This international alignment is viewed as essential for addressing shared challenges and ensuring the UK remains competitive while upholding financial system integrity.
The paper highlights plans to apply the FCA’s Consumer Duty framework to cryptoasset activities, establishing higher standards for firms in their interactions with retail customers. This includes specific disclosure requirements under the A&D regime to strengthen consumer protections and enhance trust in the sector. Environmental, social, and governance (ESG) considerations are also addressed, acknowledging the environmental impact of cryptoasset activities and proposing transparency measures to mitigate these effects.
The FCA recognises the potential costs to firms in complying with these proposals, including training, adjustments to business models, and reporting requirements. While these costs may present initial challenges, they are seen as necessary to build a safer, more transparent, and sustainable market for cryptoassets. The proposed measures aim to balance regulatory oversight with innovation, ultimately benefiting consumers and market participants.
Feedback on the discussion paper is invited until 14 March 2025, with stakeholders able to respond via the FCA’s website or email. This input will help refine the proposals, which will undergo further consultation and engagement before any final rules are adopted. By moving towards a comprehensive regulatory framework, the FCA aims to support innovation and growth in the sector while ensuring robust consumer and market protections are in place.
