The UK FCA proposes relaxing the four core rules for crypto companies, emphasizing strong operational safeguards. The regulator cites a $1.5 billion bi-bit hack to justify stricter cyber resilience rules despite lighter principles. UK crypto ownership reaches 12%. The FCA is seeking feedback on the new regulatory framework by November 12th.
The UK financial regulator has announced proposals that could reconstruct how cryptocurrency companies operate within the country.
The Financial Conduct Authority (FCA) said Wednesday that crypto companies could be exempt from four key principles that usually apply to financial services companies.
These rules usually ensure that businesses act in integrity, skill and hard work, and the best interest of their customers.
The FCA talks come when the UK positions itself as a key player in the global digital assets sector after signalling it to work with the US in a coordinated approach in April.
The FCA proposes relaxing the four core principles of the crypto sector
The FCA said it is considering removing four specific obligations on the crypto trading platform.
The company will run the business with integrity, act with care and skill, covering requirements that consider the customer’s interests and cover appropriate advice and discretionary decisions made to the client.
Regulators noted that while crypto assets remain unstable and dangerous, the new framework is designed to help businesses meet consistent standards without compromising competition.
Regulators stressed that these adjustments are intended to support the growth of the UK crypto industry while maintaining trust and market stability.
At the same time, he emphasized that crypto assets remain at risk and that consumers must continue to be protected from poor business practices.
Stronger operational risk rules after a $1.5 billion hack
While relaxing some principles, the FCA also proposes stricter measures on operational risk.
The move follows a $1.5 billion hack from Dubai-based Exchange Bybit in February. This was pointed out as an example of why “strong operational resilience control” is needed.
The FCA hopes to ensure that businesses have systems that can withstand cyberattacks and operational failures, and is becoming more frequent as the digital asset market expands.
The consultation paper also asks whether access to the Financial Ombudsman service should be extended to crypto companies, providing clients with a route to reward when a dispute arises.
Additionally, this market requires feedback on whether consumer obligations (avoiding businesses to put the interests of customers first) apply.
Increased ownership of UK cryptocurrency
In recent years, crypto ownership has been rising rapidly in the UK.
According to government data, about 12% of adults own or own cryptocurrencies such as Bitcoin and Ethereum, compared to just 4% in 2021.
This rapid growth underscores the need for a regulatory framework that protects customers and allows the industry to expand in a competitive environment.
The FCA is seeking feedback on the proposal by November 12th.
The final rule could set a tone for how the UK balances consumer protection with its ambition to build a sustainable and competitive digital asset sector.
