FCA releases discussion paper on crypto market transparency, abuse

The United Kingdom may see crypto asset regulation in 2026, the Financial Conduct Authority (FCA) said. In its latest step in that direction, the FCA has released a discussion paper on admissions and disclosures and market abuse regulation.

What to admit and how

Under government plans, the FCA’s authority will be extended beyond its current Anti-Money Laundering and promotions supervision to include crypto asset trading, stablecoin regulation, intermediation, custody, and other activities.

Tokenized financial instruments, security tokens and investment vehicles are already covered by the Financial Services and Markets Act 2000 (Regulated Activities) Order (RAO) 2001.

The FCA foresees allowing crypto asset offerings only through exemptions:

“Public offers will be prohibited unless an exemption applies. For example, when made via admission to trading on a CATP [crypto asset trading platform] or when only available to qualified investors, such as institutional investors.”

Once an exemption is made, due diligence and disclosures are carried out, leading to the asset’s admission to the CATP at its discretion. Public disclosures will be required to meet certain standards, otherwise, “we can use our power […] to direct a firm to provide compensation in relation to breaches of the financial promotions regime.”

Related: UK cryptocurrency ownership rises to 12% as FCA prepares new regulations

Who stops the abusers?

A civil market abuse regime exists for traditional finance in the United Kingdom, but it has already been determined that the regime cannot be transferred directly to crypto assets. The FCA acknowledged the influence of the International Organization of Securities Commissions (IOSCO) crypto and digital asset market recommendations on its proposals.

Source: Andre Omietanski

According to the FCA, “The government’s consultation response has made clear the intention to facilitate through legislation cross-trading platform information sharing.” The FCA does not intend to create mechanisms to facilitate the sharing. Nonetheless:

“For example, if CATP 1 offboards User A, and where User A has an existing account with CATP 2, information gathered by CATP 1 on User A’s suspected market abuse behaviour could be shared with CATP 2. Such information could help CATPs to make more informed decisions.”

HM Treasury first released its plans for a crypto regulatory framework in February 2023.

In November 2024, the new government confirmed its intentions to stick to that plan, but with revised implementation, eliminating the phased approach. The FCA will hold consultations on stablecoin regulation separately. It is accepting feedback on the 49 questions in the paper from domestic and international stakeholders, particularly those in the wholesale sector, through March 14, 2025.

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