UK FCA Plans to Waive Some Rules for Crypto Companies: FT
The UK’s Financial Conduct Authority (FCA) has opened consultation CP25/25, outlining its roadmap to bring crypto businesses into the regulatory framework by 2026. The initiative aims to create rules that are proportionate, ensuring innovation in the digital asset sector is not stifled while protecting market integrity and consumers. The consultation is a key step in shaping how crypto firms will operate under UK oversight.
As part of the proposal, the FCA has suggested introducing a targeted waiver for crypto rules in areas where traditional financial regulations cannot be directly applied. This flexibility acknowledges the unique structure of digital assets compared to conventional markets. By adopting this approach, the regulator seeks to balance oversight with practical implementation, giving the industry space to adapt without unnecessary compliance burdens.
What the UK FCA crypto rules waiver would change
Firm classification & systemic risk
Most crypto firms would sit under SYSC as “other firms,” not “common platform firms” like banks or investment firms, because crypto companies do not typically pose the same level of systemic risk. That means different (generally lighter) governance/control expectations than banks. FCA
Cancellation/cooling-off rights
FCA does not plan to consult on cancellation rights for crypto services, citing the COBS 15 exemption for contracts whose price depends on market fluctuations beyond the firm’s control and the high volatility of crypto.
Permissionless blockchain use
Participation in permissionless DLTs would not be treated as outsourcing under SYSC 8, avoiding impractical third-party oversight requirements; firms must still bolster operational resilience.
Senior managers & controls (SM&CR)
FCA proposes applying existing SM&CR elements without adding crypto-specific roles; “Enhanced” tier would apply only where criteria are met.
Scope, standards and where rules may tighten
Operational resilience
SYSC 15A would apply in full, with emphasis on cyber attacks, outages and third-party failures.
Financial crime
Alignment with SYSC 6 and updated FCA Financial Crime Guide expectations for crypto.
What remains under consultation
Consumer Duty and redress
How (and how far) the Consumer Duty and access to the Financial Ombudsman Service should apply. Discussion closes Oct 15, 2025.
Conduct of business/product governance
FCA will consult further on COBS/PROD tailoring and product-information standards specific to crypto. Consultation closes Nov 12, 2025 for chapters 1–5. Final rules are due in 2026.
Timeline for the UK FCA crypto rules waiver
Now: CP25/25 published; feedback windows open.
Oct 15, 2025: Discussion (chs. 6–7) feedback deadline.
Nov 12, 2025: Consultation (chs. 1–5) closes.
2026: FCA to publish final rules and integrate crypto into the rulebook.
Context & Analysis
Analysis: The FCA’s approach signals “same risk, same regulatory outcome” but with pragmatic waivers where legacy rules don’t fit crypto e.g., cooling-off rights and outsourcing. In parallel, resilience and crime-prevention standards rise. The stance contrasts with the Bank of England’s recent ideas to cap holdings of “systemic” stablecoins, underscoring a broader UK debate on how to balance innovation and stability.
Conclusion
The FCA is seeking input to develop a balanced regulatory framework that reflects the unique technical aspects of crypto while strengthening governance, operational resilience, and measures against financial crime. This approach aims to ensure that crypto firms operate safely and transparently within the UK market.
Firms that actively provide feedback and begin preparing for the 2026 regulatory rollout will have a clear advantage. Early engagement allows businesses to align their practices with the expected standards, ensuring smoother compliance and positioning them favorably once the new rules come into effect. Proactive planning will be key to success in the evolving regulatory landscape.
FAQs
Q : What is the UK FCA crypto rules waiver?
A : It refers to targeted areas where legacy rules are waived or tailored for crypto—for example, not treating permissionless DLT as outsourcing and not applying cancellation rights.
Q : Will banks’ rules apply to crypto firms one-for-one?
A : No. Most crypto firms won’t be treated as “common platform firms” like banks due to lower systemic risk.
Q : Do customers still get a cooling-off period?
A : No. FCA does not plan to consult on cancellation rights for crypto, citing volatility and existing COBS 15 exemptions.
Q : Is using a public blockchain considered outsourcing?
A : No. FCA proposes that using permissionless DLT is not outsourcing under SYSC 8, but firms must manage resilience risks.
Q : When will the rules take effect?
A: Consultation closes Oct 15/Nov 12, 2025; final rules are expected in 2026.
Q : How does SM&CR apply to crypto firms?
A : FCA proposes applying existing SM&CR elements without crypto-specific SMFs; “Enhanced” tier only if criteria are met.
Q : How can firms influence the outcome?
A : By submitting evidenced feedback via the FCA’s consultation and preparing for authorisation and operational resilience obligations.