UK's FCA Proposes New Prudential Rules to Strengthen Crypto Firm Oversight

Key among the FCA’s proposals is the extension or clarification of its Consumer Duty for crypto firms. Under the new proposals, firms would be required to treat customers fairly, provide clear and accurate disclosures, and avoid misleading or opaque promotional practices.

The FCA is also considering tightening complaint-handling standards. It is exploring whether crypto firms should be required to allow consumers access to the Financial Ombudsman Service for crypto-related disputes, in order to ensure independent redress when issues arise.

Operational controls and governance are another major focus. The FCA proposes that crypto firms strengthen internal oversight systems including risk controls, governance roles, record keeping, and escalation procedures. The goal is to ensure that operational risks such as fraud, mis-management or technical failures are better managed.

Transparency and disclosure are central to the proposals. The FCA states that crypto firms should provide clearer information to consumers about the products and services they offer, including risk factors, fees, and how backing or reserve assets are managed where relevant. Advertising and promotional materials must be fair, accurate, and not misleading.

These good business practice proposals run in parallel with CP25/15, the FCA’s consultation paper that is focused on prudential rules for cryptoasset firms. CP25/15 seeks to impose requirements on firms issuing qualifying stablecoins and those safeguarding qualifying cryptoassets, including in areas like capital adequacy, liquidity, and risk controls.

As part of its prudential agenda, CP25/15 proposes measures such as minimum capital levels, liquidity requirements and concentration risk monitoring. These aim to ensure that crypto firms have sufficient financial resilience and risk management practices.

The FCA also underlined the need to balance stronger oversight with support for innovation. While it wants firms to implement robust systems and higher standards of conduct, it has stressed that regulation should be proportionate so that smaller firms are not unduly burdened. By setting out clear expectations early, the FCA argues it can provide regulatory certainty that encourages responsible innovation while deterring practices that undermine consumer trust.

The FCA has requested feedback from firms and stakeholders on these proposals. The consultation for both the business practices proposal and CP25/15 is part of its broader roadmap for regulating cryptoassets. Final rules are expected after reviewing the consultation responses with implementation likely to follow in due course.

The regulator emphasized that these measures are intended not only to protect consumers but also to strengthen trust in the wider crypto market. By establishing clear expectations for firms’ conduct, disclosures, and governance, the FCA aims to create a level playing field that discourages bad practices and promotes sustainable growth. This, it argues, is essential if crypto is to develop into a credible part of the UK’s financial system.

The FCA’s press release shows an intention to set new standards of business conduct for crypto firms, complementing its prudential proposals. Together these efforts reflect a regulatory approach that seeks not only to reduce financial risk, but also to promote fairness, transparency and stronger protections for consumers in the crypto sector.