Financial Times: The UK plans to fully regulate cryptocurrencies in 2026, relax some principles, and strengthen targeted supervision.

The British financial regulator plans to bring the cryptocurrency industry under comprehensive supervision from 2026, but will relax some rules in response to its uniqueness. The move aims to promote market innovation while balancing consumer protection and risk management.
(Preliminary summary: Observation》The UK lost the cryptocurrency? Former Chancellor of the Exchequer Osborne admitted that he was "left behind by the world")
(Background supplement: The Bank of England plans to "limit stablecoin holdings" and caused public outrage: it is simply unworkable and will only fall behind the global encryption competition)

According to the Financial Times, the British Financial Conduct Authority (FCA) plans to start from 2026 Starting from 2020, the cryptocurrency industry will be fully integrated into its regulatory framework, but at the same time, some rules will be exempted for the cryptocurrency industry to adapt to the unique needs of this rapidly growing industry.

The reasons behind regulatory adjustments

Regarding this decision, David Geale, FCA’s executive director of payments and digital finance, said that directly applying traditional financial rules to regulate the cryptocurrency industry is not suitable because the underlying technology and characteristics are completely different from traditional finance. In a consultation paper published on Wednesday, the FCA proposed adapting existing rules based on the unique characteristics and specific risks of digital assets such as Bitcoin.

Gill emphasized that the authority’s regulatory principle is “same risks, same regulatory results”, but it will not lower overall standards. He pointed out that the "permissionless" distributed ledger technology of digital assets allows transactions to usually occur without the intervention of intermediaries, which is significantly different from the traditional financial system and therefore requires a more flexible regulatory approach.

In addition, this decision was also affected by the pressure of international competition. The United States has adopted a friendlier stance toward cryptocurrencies under the Trump administration, prompting the United Kingdom to step up its efforts to maintain the attractiveness of its financial markets. Over the past five years, the UK has required cryptocurrency companies to register with the FCA and comply with anti-money laundering and counter-terrorism financing regulations, and the launch of a comprehensive regulatory framework will further regulate the market.

Relax core principles and strengthen targeted supervision

It is worth noting that the FCA plans to exempt cryptocurrency trading platforms from complying with some of the core principles in its official manual, such as "honest business", "due diligence", "treating customers fairly" and other general principles. In addition, compared to banks or investment companies, cryptocurrency companies will not completely follow bank regulations in terms of the appointment of senior managers, internal controls and outsourcing regulations. At the same time, crypto trading platforms do not have to provide a "cooling off period" or "cancellation right" in the future, because digital asset prices fluctuate violently, making it difficult for traditional protection mechanisms to be implemented. The FCA believes that digital asset companies generally do not pose the same systemic risks as traditional financial institutions and therefore can adopt lighter regulatory standards.

However, the FCA also plans to strengthen supervision in certain areas, such as targeting operational risks such as cyber attacks and IT disruptions. The FCA cited, for example, the $1.5 billion cryptocurrency theft suffered by the Bybit exchange this year, which highlighted the need for stronger operational resilience and corresponding control measures for cryptocurrency companies.

Gill said the FCA hopes to support the growth of new markets while protecting consumers from the high risks of the cryptocurrency market. He emphasized that cryptocurrency is a high-risk investment and consumers should be mentally prepared: they may lose all their funds. The FCA is currently seeking industry views on whether consumer liability rules apply to the cryptocurrency industry and whether customers will be allowed to complain to the Financial Ombudsman Service.