UK to finalise crypto regulation framework by 2026

The UK plans to implement comprehensive regulations for the cryptocurrency industry by 2026, as Prime Minister Keir Starmer’s government aims to align with leading global financial hubs.

The Financial Conduct Authority (FCA) announced on Tuesday that it will kick off consultations and discussion papers starting this quarter. These efforts will shape regulations addressing key areas such as market abuse, trading platforms, crypto lending, and stablecoins.

By early next year, the FCA also plans to introduce specific rules for “stablecoins,” which are typically backed by traditional currencies like the US dollar.

According to FCA data, cryptocurrency ownership in the UK has surged, with 12 per cent of adults now holding digital assets. Despite this growth, the regulator reiterated that crypto remains “largely unregulated in the UK and high-risk.”

“Our research results highlight the need for clear regulation that supports a safe, competitive and sustainable crypto sector in the UK,” Matthew Long, director of payments and digital assets at the FCA, noted.

Over the past year, the FCA has tightened rules on promoting and selling cryptocurrencies, requiring companies to issue “clear warning” about the high-risk nature of such investments and the potential for financial loss.

Watchdog Faces Parliamentary Criticism

The FCA’s roadmap comes amid sharp criticism from a cross-party parliamentary group, which on Tuesday accused the watchdog of being “not fit for purpose.” A report from MPs and peers called for a major overhaul of the regulator, describing its actions as “slow and inadequate” and its leadership as “opaque and unaccountable.”

“We sympathise with those who have lost out as a result of wrongdoing in financial services,” the FCA said in response to the report. “However, we strongly reject the characterisation of the organisation,”

The FCA’s performance has come under scrutiny following a series of financial scandals that have shaken confidence in the UK’s financial sector.

This dual narrative of the FCA’s ambitious plans for crypto regulation and its struggles with public and political confidence highlights the challenges ahead as the UK seeks to assert itself as a leader in the evolving global crypto landscape.

Attribution: Bloomberg & AFP