As the process of shaping the rules governing regulation of cryptoassets in the UK continues, the FCA's consultation process provides some indications on how it may approach enforcement in this area. Further consultations expected over the coming months will shed further light on how it proposes to uphold core standards on market integrity and consumer protection without stifling innovation and growth.

The FCA's consultation exercise

The consultation exercise, which concluded on 12 November, follows HM Treasury's draft Statutory Instrument ("SI") (published in April 2025), which set out the provisions which will bring certain cryptoassets activities into the UK regulatory perimeter under the Financial Services and Markets Act 2000 ("FSMA").

Requirements for crypto firms to be authorised by the FCA are not imminent. The legislation that will introduce these requirements has not yet been finalised. The FCA set out its proposed timeline in its Crypto Roadmap (as discussed in our RIFC blog post here). So far, it is broadly adhering to that timeline. A recent speech from the FCA's Executive Director responsible for payments and digital finance, David Geale has indicated that the next tranche of consultation documents (which, he stated, will cover the application of consumer duty and regulatory reporting requirements) will follow by early 2026. There is not yet any confirmation of the proposed timing of consultation on some other important rules (for example those relating to market abuse) will be applied to cryptoassets, although the FCA has not revised its estimate in the Crypto Roadmap that all necessary Policy Statements will be finalised during 2026, and that the rules setting out the regulatory framework for cryptoassets in the UK will take effect shortly thereafter.   

The FCA's latest consultation paper gives some early indications of its likely enforcement priorities, making clear in broad terms the types of harm on which it is (and will remain) focused when crypto firms do come within its regulatory remit. Governance, financial crime, fraud and sanctions evasion and operational resilience are highlighted as areas of emphasis.

The consultation paper set out the FCA's proposals to apply existing FCA Handbook requirements to crypto firms, including the Consumer Duty. The FCA is also considering whether to extend the application of the Duty with sector-specific guidance and/or tailored rules. Further details on how it will balance the competing imperatives of protecting consumers and facilitating innovation and growth will emerge once the FCA has considered firms' responses to its consultation paper and in the further consultation exercise concerned with the application of the Consumer Duty expected in the coming months.

The likely UK enforcement environment

The FCA is already able to take enforcement action against firms and individuals in connection with crypto-related activities. It has done so in cases where it and other enforcement agencies have identified suspected criminal activity, although these have typically involved prosecutions of individuals for fraud, money laundering and unauthorised business offences rather than the exercise of regulatory powers.

As the FCA has made clear during the consultation exercise to date, financial crime compliance remains a priority area. The paper acknowledges that the use of cryptoassets in money laundering, terrorist financing and proliferation financing is a growing concern The FCA  proposed specific measures to build upon existing requirements under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and  to ensure that firms have the adequate systems, controls and policies to address the heightened levels of financial crime risk accompanying crypto-related activities. Public statements since the consultation exercise concluded have underlined that the FCA will particularly scrutinise firms' operational resilience. The FCA has made clear that dependencies on technology and the decentralised nature of cryptoassets mean that it proposes to require cryptoasset firms to meet stringent operational resilience standards similar to those imposed on banks. The FCA expects to consult in 2026 on further non-Handbook guidance on how firms that use DLT should comply with and implement the firm's operational resilience framework.

However, in line with its pro-technology and pro-innovation approach, in the consultation paper the FCA set out a wish to take a "proportionate" and "flexible" approach to supervision and enforcement. This may mean that, in the first instance at least, the FCA will prefer proactive supervision to reactive enforcement and that publicised cases involving crypto firms will remain confined to those where cryptoassets are used to commit or to realise the benefits of other criminal activity. In the UK, the FCA has faced criticism historically for its cryptoassets firm registration regime, for slow processing and low approval rates, with fewer than 15 per cent of applications approved. Over the last few months, the FCA has reduced the time it takes to approve an application by two-thirds and has increased the approval rate to 45 per cent of applications received. This shift is welcome as the FCA prepares for implementation of its regulatory and supervisory framework for the crypto market next year.

International perspectives: Approaches in other key jurisdictions

There is some variation between regulatory approaches to cryptoassets globally. If the FCA decides to adopt a less stringent approach (at least in terms of the extent to which its Handbook applies directly to crypto firms and individuals within them and/or numbers of enforcement cases), this would be congruent with the approach now being taken in  the US, where the change to a more crypto-friendly administration has resulted in renewed focus on digital asset innovation. On 23 September 2025, the new Chair of the Securities and Exchange Commission Paul Atkins announced a plan to roll out an "innovation exemption" for digital assets by the end of 2025. This exemption will form part of the SEC's "Project Crypto", an initiative to reduce regulatory burdens for the crypto industry and reform America's crypto regulatory landscape.

However, some jurisdictions are favouring a tougher approach. In Australia, the Federal Government has recently consulted on bringing crypto service providers under its national Australian Financial Services License ("AFSL") regime. The proposal involves requiring crypto exchanges and certain crypto service providers to meet obligations consistent with traditional service providers. This is expected to consolidate the regulations within the crypto sector and tighten its oversight. In an environment where a well-resourced Australian Securities and Investments Commission ("ASIC") is pursuing increasing numbers of enforcement investigations (with its recently released annual report indicating a 50 per cent uptick in the last year), it would not be surprising to see prompt and robust action based on these new rules. 

Other jurisdictions are also imposing new requirements – Hong Kong introduced a new stablecoin ordinance on 1 August 2025 and in Singapore, the government is looking to update the Payment Services Act 2019 and to publicly consult the market to develop a new digital payments framework.

In Hong Kong, the new ordinance designates the Hong Kong Monetary Authority ("HKMA") as the sole licensing and supervisory authority for stablecoin issuers. Firms which did not submit an application for a licence by 31 October 2025 will be required to close their business in Hong Kong on or by 30 November 2025. The Monetary Authority of Singapore ("MAS") also requires stablecoin issuers to apply for licences per its stipulated requirements to be recognised as "MAS-regulated stablecoins". The difference there is that if such requirements are not met, the firm will not need to close their business. It will simply mean that users can easily identify MAS-regulated stablecoins from others and can make an assessment of whether to deal in unregulated stablecoins, which may not offer the same protection and stability as MAS-regulated ones.