UK Financial Regulator Considers Exempting Crypto Firms from Key Conduct Rules
The Financial Conduct Authority proposes removing four core regulatory obligations from cryptocurrency companies, including integrity and customer interest requirements, to modernize digital asset oversight by November 2025.
The FCA’s plans involve waiving traditional financial conduct principles that currently apply to all authorized firms operating in Britain. This regulatory shift affects industries where digital assets have gained significant traction, which may include borderless poker with cryptocurrency platforms that operate across jurisdictions while serving UK customers who value fast, private transactions outside conventional banking systems.
Core Regulatory Principles Face Removal
The proposed exemptions target four fundamental requirements that have governed financial services for decades. Crypto firms would no longer need to show they conduct business with integrity, act with proper care and skill, put customers first, or give appropriate guidance when making decisions for clients.
FCA officials argue that rules designed for traditional banks and investment firms don't match the unique structures found in cryptocurrency businesses. The regulator believes existing frameworks may hinder innovation while failing to address the specific risks that digital asset companies actually face in their daily operations.
Compensation Through Operational Requirements
The authority plans to balance these removed obligations by imposing tougher operational security and system stability rules on crypto companies. The February Bybit attack, where hackers compromised around $1.5 billion in user funds, shows why cybersecurity and operational controls matter more than traditional conduct requirements for digital asset firms.
David Geale, FCA Executive Director of Payments and Digital Finance, states the goal involves balancing innovation support with market integrity protection. The regulator wants to clarify expectations for an industry that has operated under uncertain regulatory conditions since its emergence.
Consumer Protection Measures Under Review
The consultation asks whether consumer protections should apply to cryptocurrency firms, including the Consumer Duty framework and Financial Ombudsman Service access. These protections stay under discussion while the FCA decides how to protect users without blocking technological progress.
Industry groups and the public can submit feedback until November 12, 2025. The extended comment period gives different stakeholders time to raise concerns about customer protection gaps or unreasonable regulatory burdens on new businesses.
Industry Reactions Split on Proposals
Some industry observers believe that relaxing conduct rules could damage public confidence in cryptocurrency services. Others point out that digital asset companies currently deal with outdated regulations that don't fit their business models or the decentralized nature of their operations.
The FCA's approach mirrors what regulators worldwide are doing with cryptocurrency oversight. Most want to protect consumers but avoid crushing innovation before it develops. The authority released separate papers this year covering stablecoin rules and crypto custody requirements that focus on asset protection and transparency.
Impact on UK Market Position
How the consultation turns out will affect how British crypto companies compete internationally. Countries that have updated their rules for digital assets often attract more business from companies looking for clearer regulatory paths.
The review marks the FCA's biggest attempt to update cryptocurrency rules since digital assets became mainstream. What happens next will likely influence how other countries balance innovation with consumer protection in their own digital asset policies.
***
DISCLAIMER
The views, the opinions and the positions expressed in this article are those of the author alone and do not necessarily represent those of https://www.cryptowisser.com/ or any company or individual affiliated with https://www.cryptowisser.com/. We do not guarantee the accuracy, completeness or validity of any statements made within this article. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author. Any liability with regards to infringement of intellectual property rights also remains with them.