FCA Seeks Feedback on New Crypto Rules to Boost Market Transparency

Highlights:

• The FCA is seeking feedback on new crypto rules to improve transparency and reduce market abuse.
• The regulator has also proposed stronger controls to help crypto firms prevent fraud and protect consumers.
• The regulator has set out a roadmap for regulation that is expected to be in place by 2026.

The UK’s Financial Conduct Authority (FCA) is looking for industry feedback on initiatives to make crypto markets more transparent. The proposals, set out in Discussion Paper DP24/4, relate to admissions, disclosures, and market abuse regimes. As the crypto sector continues to grow rapidly, the FCA wants to introduce stronger controls to avoid harm and protect consumers.

Clear admissions, disclosures and market abuse rules will help improve the integrity of our crypto markets, while protecting people and supporting the UK's growth and competitiveness.

Find out more https://t.co/zB3e0xXkti#crypto #CryptoRegulation #FinancialRegulation

— Financial Conduct Authority (@TheFCA) December 16, 2024

This discussion paper builds on insights gathered from FCA-led crypto roundtables held with industry participants earlier this year. The FCA is encouraging market feedback to help shape regulations in the UK’s largely unregulated crypto sector. The deadline for submitting feedback is 14 March 2025.

New Measures to Prevent Market Abuse

The FCA is proposing that crypto firms implement stronger internal controls intended to prevent fraud and market manipulation. Specifically, the FCA is requesting that authorized crypto trading platforms report the details of transactions to each other. Such a collaboration would avoid market abuse and fraud and promote common practices in the sector.

The FCA’s proposals seek to mitigate risk without killing innovation. Introducing these measures aims to keep fair and orderly trading conditions. The new rules are meant to ensure a safe environment for consumers and investors.

Ensuring Transparency in Crypto Markets

The FCA wants to promote the transparency of markets and ensure that consumers have the information they need before buying or selling crypto assets. The regulator is urging the firms to provide people with information that will help them understand the risks involved.

In addition, the FCA is focused on reducing risks such as money laundering and fraud. Controls and processes included in the proposals would address these issues and strengthen the market. The FCA hopes that the change will help improve regulatory clarity so that firms and consumers can be clear about “the rules of the game.”

Roadmap for Crypto Regulations

A roadmap for crypto regulations in the UK has been defined by the Financial Conduct Authority. The regulator hopes to introduce comprehensive legislation by 2026. The new Labour government has been keen on innovation and is moving away from the UK government’s previous crypto regulation. The FCA’s plan includes consultations and discussion papers that will take place over the next two years.

The UK's Financial Conduct Authority (FCA) released a discussion paper (not law!), which sets out a crypto regulatory roadmap and an initial steer on how the FCA may regulate crypto & crypto asset public offerings (ICOs)

A brief overview, link to paper & brief analysis below 👇 pic.twitter.com/8awdyTB2vZ

— Andre Omietanski (@punk6052) December 16, 2024

The FCA is also grappling with the challenge of how decentralized issuers will disclose data. One proposed solution is for crypto exchanges to provide essential information to customers based on publicly available data.

A recent YouGov survey has revealed increasing interest in crypto. According to the report, 12% of British adults now hold crypto. This is a 10% increase from 2022. On average, the value of crypto held rose from £1,595 to £1,842. Though there has been a rise in ownership, a third of respondents still think they can file complaints with the FCA when, in fact, crypto is largely unregulated. Moreover, instead of exchanges, the greatest source of crypto research is online forums, with friends and family a close second.