Crypto remains at the centre of the Financial Conduct Authority’s (FCA’s) plans for 2025 as it looks to finalise plans to regulate the digital currency.

In a blog published on 26 November 2024, Matthew Long, director of payments and digital assets at the FCA, said: “We’re aiming to create a regime that puts in place strong systems and controls that enables fair, orderly, transparent and efficient trading.

“Ultimately, we want our regime to consider the unique characteristics of crypto and deliver in the best interests of the client.”

Long’s comments come as the FCA publishes its roadmap outlining the planned policy publications for cryptoassets and estimated timeline for the rollout of the regime.

According to the FCA’s Crypto Roadmap, various consultation and discussion papers, including those on lending, trading platforms and recordkeeping, are due to be published in the first half of 2025.

This will be followed by rules on conduct and firm standards for all Regulated Activities Order (RAO) activities in Q3 2025, with final rules and supporting policy statements to follow.

The FCA hopes the regulatory regime for cryptocurrency will go live in 2026.

Latest research by the FCA shows that 12% of UK adults now own crypto, with the average amount of crypto held by individuals standing at £1,842. 

However, despite its growing popularity, crypto remains largely unregulated in the UK and there is little protection if anything goes wrong.

In response to this, the FCA has been working on a crypto regulatory regime and in 2024 held a series of roundtables to help shape its approach to regulating specific areas of crypto.

Over the past 12 months, the financial regulator has brought together over 100 organisations involved in the industry, including crypto exchanges, banks, trading firms, blockchain analytics companies, law firms, government officials, academics and other regulatory authorities to discuss the challenges and opportunities of the future crypto regime.

Issues that were considered included location policy, operational resilience requirements, conflicts of interest and matching and order execution.

The discussions resulted in several key takeaways:

• Participants welcomed the distinction between retail and wholesale for areas such as incorporation, disclosures and customer protections, product choice and options, risk management and alignment with existing traditional finance rules.
• International standards must be adhered to in supporting growth and reducing regulatory burdens.
• Price should not be the only factor considered in the ‘best execution’ for clients’ orders. Other factors, like custody arrangements and asset safety, are also important.
• Exchanges that issue their own tokens or run other activities such as brokerage and market making are likely to pose the most significant conflicts of interest.

As a result, Long revealed that the FCA has made significant progress in its plans to regulate crypto.

 “While there is still work to be done, I’m pleased to be able to say that we’re already making progress in some of the areas we discussed during these roundtables” said Matthew Long.

“For example, we’re leading the implementation of international crypto regulatory standards via our leading role in the International Organisation of Securities Commissions (IOSCO). We’re also already working with industry and the Treasury to help shape an industry-led market-abuse information sharing platform,” he continued

“We’re committed to working closely with the government, international partners, industry and consumers to help us get the future rules right,” he said.

Compliance Solutions for Regulated Services

The new crypto currency regime will prompt seismic changes for the industry. Traders, providers and other industry players must ensure they remain on top of their regulatory requirements as the details continue to be released.

At the Regulation & Compliance Office (RACO), we can help organisations of all shapes and sizes from across different sectors undertake a review of their policies, controls, and procedures to ensure that they are compliant with AML regulations and, therefore, avoid any breaches.

A review of this nature provides valuable insight into a business when performed correctly. Along with an overview of risk, these crucial assessments also highlight issues within the business, so it is essential to undertake a proper review. All of a company’s building blocks must be considered, including its staff, clients, operations, and finances.

By working with RACO, a business can be assured that we will bring the required level of knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:

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Our services focus on businesses’ anti-money laundering and regulatory requirements through the implementation of effective policies, procedures, training, and consultancy. We also provide continued monitoring of staff and ongoing training to ensure that everyone within a business is aware of the latest requirements and complies with their responsibilities.

We offer a full range of services focused on ensuring businesses across all regulated sectors create, maintain and evidence their compliance with the requirements of their regulators and legislation. We work with businesses of all sizes, from the smaller high street or niche businesses to the large multi-office and multinationals.

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If you want to discuss our services in more detail, contact us at 0203 985 8550, email us at info@regulationandcomplianceoffice.co.uk or complete an enquiry form.