The Financial Conduct Authority (FCA) has unveiled sweeping new regulations that will force crypto firms operating in the UK to prove they can weather market shocks and hold capital against risky assets. The rules, set to take effect in October 2026, mark the first comprehensive regulatory framework for the crypto industry in the UK, which has so far faced minimal oversight despite a surge in popularity driven by social media influencers and a legitimisation push under US President Donald Trump.
What the New Rules Entail
Under the new regime, crypto firms must meet capital requirements—building a financial cushion to absorb losses linked to risky assets on their balance sheets. They will also be required to conduct annual stress tests to demonstrate they can withstand major market shocks and economic strain. David Geale, the FCA’s executive director in charge of payments and digital finance, stated: “For the first time, we’ve got a comprehensive regulatory framework for crypto in the UK, one that covers how firms trade, how they hold assets, serve consumers and manage risk.” He added that the package “applies the same core principles we use across financial services. So where we see the same risk … we’re looking for the same regulatory outcomes.”
Industry Influence on Capital Requirements
However, crypto firms will be allowed to determine how much risk sits on their balance sheets, which will dictate their capital holdings. Unlike major UK banks, which are given specific scenarios by the Bank of England to test resilience, crypto companies will conduct their own stress tests based on internal risk assessments, which must be submitted to the FCA annually. The regulator also reduced the capital required for some crypto assets—such as stablecoins pegged to fiat currency—following industry pushback.
Consumer Risks Remain
The new rules do not eliminate risks to consumers, who are still warned they could lose all their money if they invest in crypto. FCA bosses hope increased supervision will curb bad behaviour and questionable business practices that have left many out of pocket. Geale said: “Consumers have been exposed to real harm from unregulated activity and the regime that we’re putting in place, we believe, addresses that directly.” He stressed that the regulations should not stifle the burgeoning crypto industry: “This is really about giving crypto a solid foundation from which to build. Firms have been asking us for regulatory clarity and we think we’ve delivered it.”
Expert Warnings
Dan Coatsworth, head of markets at investment platform AJ Bell, warned consumers to remain cautious. “Crypto has grown in popularity as a way for people to spread their wealth, but it has also become associated with get-rich-quick schemes and worryingly portrayed on social media as an easy way to make money,” he said. “There is a danger that people aren’t thinking about the safety of their money when looking to gain exposure. Regulation provides stronger consumer protection and helps to reduce scams, misleading promotions and losses from poor practices. It can reduce risk but doesn’t remove it completely.”
