HM Treasury and FCA Publish Comprehensive Cryptoasset Regulatory Framework

On 16 December 2025, the Financial Conduct Authority (FCA) published a comprehensive set of proposals to formally regulate the cryptoasset market. The FCA’s proposals, detailed in three consultation papers (CP25/40, CP25/41, and CP25/42), were released a day after HM Treasury announced that it had laid the draft ‘Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025’ (the Cryptoasset Regulations) before Parliament. Together, the Cryptoasset Regulations and respective FCA consultations establish the framework for the UK’s new cryptoasset regulatory regime.

Background

The FCA’s regulatory remit over cryptoassets is currently limited to financial promotions and anti-money laundering requirements. The Cryptoasset Regulations will significantly expand this scope by introducing new regulated activities and designated activities under the Financial Services and Markets Act 2000 (FSMA). CP25/40, CP25/41 and CP25/42 together outline the FCA’s approach to supervising cryptoasset activities, trading platforms, disclosures, and market integrity.

The Cryptoasset Regulations

The Cryptoasset Regulations establish seven new regulated activities under FSMA: 

1. issuing a qualifying stablecoin;
2. safeguarding qualifying cryptoassets;
3. operating a qualifying cryptoasset trading platform (CATP);
4. dealing in qualifying cryptoassets as principal;
5. dealing in qualifying cryptoassets as agent;
6. arranging deals in qualifying cryptoassets; and
7. arranging qualifying cryptoasset staking.

The Cryptoasset Regulations also establish a designated activities regime for public offers of qualifying cryptoassets and admissions to trading on CATPs, alongside a market abuse regime prohibiting insider dealing, unlawful disclosure of inside information and market manipulation in relation to qualifying cryptoassets. 

Regulating Cryptoasset Activities

CP25/40 sets out proposed rules for CATPs, intermediaries, cryptoasset lending and borrowing, staking and decentralised finance (DeFi). 

CATPs will be required to establish non-discriminatory rules for platform access and operation, monitor algorithmic trading activity and implement systems to prevent market abuse. The FCA proposes to allow CATP operators to also hold principal dealer permissions, subject to conflicts of interest safeguards, but will require legal separation where credit risk exposure arises. 

Intermediaries will be subject to best execution requirements and restrictions on dealing with UK retail clients in cryptoassets not admitted to trading on a UK CATP with a qualifying cryptoasset disclosure document (QCDD). In addition, the FCA proposes to permit retail access to lending and borrowing services, subject to enhanced disclosure and consent requirements, and will apply the principle of ‘same risk, same regulatory outcome’ to DeFi activities where there is an identifiable controlling entity.

Admissions & Disclosures and Market Abuse for Cryptoassets 

CP25/41 proposes an admissions and disclosures regime requiring CATPs to establish risk-based admission criteria, conduct due diligence before admitting qualifying cryptoassets to trading and ensure publication of QCDDs. 

CATPs must reject applications for admission where a qualifying cryptoasset is likely to be detrimental to the interests of retail investors. QCDDs serve as point-in-time disclosures, with ongoing disclosure obligations falling under the proposed Market Abuse Regime for Cryptoassets (MARC). Under MARC, issuers, offerors and CATPs will be required to disclose inside information as soon as possible, maintain insider lists and implement systems and controls to prevent, detect and disrupt market abuse. Large CATPs, defined as those with average annual revenue of £10 million or more over the previous three years, will additionally be required to monitor on-chain activity and share information across platforms where market abuse is suspected.

Prudential Regime for Cryptoasset Firms

CP25/42 extends the FCA’s proposed prudential framework for cryptoasset firms, introducing permanent minimum capital requirements ranging from £75,000 for arranging and dealing as agent to £750,000 for dealing as principal. 

The regime includes K-factor requirements addressing operational and exposure-based risks, an overall risk assessment process and public disclosure obligations. Cryptoassets are classified into Category A (requiring 40% capital against net positions) and Category B (requiring 100%), based on factors including trading venue, liquidity and volatility.

Next Steps 

Subject to Parliamentary approval, the new regime is expected to come into force in October 2027. The FCA is seeking responses to CP25/40, CP25/41 and CP25/42 by 12 February 2026.

The Cryptoasset Regulations are available here. CP25/40, CP25/41 and CP25/42 are available here, here, and here respectively.