The UK financial regulator FCA has proposed suspending certain rules that currently apply to traditional financial service providers for crypto firms. The aim is to tailor the regulatory system more closely to the specific characteristics of the crypto industry.
Starting in 2026, the FCA plans to more strongly integrate crypto providers into the regulated financial system - while at the same time introducing exemptions from rules that apply to traditional banks. Affected areas include requirements on business integrity, management qualifications, or the obligation to grant customers a withdrawal right (“cooling-off period”). At the same time, the FCA wants to impose stricter requirements in areas such as cybersecurity and operational resilience, according to the FT. The goal: foster innovation without putting consumer protection and stability at risk.
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What is set to change?
The FCA proposes that crypto companies should not have to meet the same strict requirements as banks - for example, that senior managers are fully liable, or that certain systems and controls must be identical to those of conventional financial institutions. The right to withdraw from a purchase (“cooling-off period”) and certain protection mechanisms that apply to traditional financial products would also not be mandatory for crypto providers.
In some areas, such as customer rights and advisory obligations, uncertainty remains - the FCA is inviting citizens and companies to provide feedback on the current consultation paper until November 12.
Where rules are to be tightened
Alongside the exemptions, there are proposals to address risks in specific areas. The FCA recognizes that crypto applications have unique vulnerabilities - especially to cyberattacks and system stability. It therefore wants to introduce stricter rules for operational risks (IT outages, security gaps) and stronger requirements to ensure technical and organizational resilience. It also remains open whether and how access to services such as the Financial Ombudsman Service or the Consumer Duty rules should be extended to crypto firms.
A key aspect of the reform is the attempt to make the UK more attractive to international crypto companies. In the past, many firms avoided the location due to regulatory uncertainty. With a clearer but also more flexible framework, London could strengthen its position as a global hub for digital assets and regain ground against rivals such as Dubai, Singapore, and the US.
