FCA discusses UK cryptocurrency rules on exchanges, lending and DeFi

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The UK’s Financial Conduct Authority (FCA) has launched a series of consultations on proposed rules for digital asset markets, marking the next stage in the government’s efforts to establish a comprehensive regulatory framework for crypto-assets.

The proposals, published over three consultation papers, cover crypto trading platforms, intermediaries, staking, lending and borrowing, market abuse, disclosure, and decentralized finance (DeFi). The FCA said it will accept responses to the consultation until 12 February 2026.

The regulator said the proposal aims to support innovation while ensuring consumers understand the risks involved in investing in cryptocurrencies. It added that regulations do not completely eliminate risk and must ensure that participants operate responsibly and transparently.

“Our aim is to put in place a system that protects consumers, supports innovation and fosters trust,” said David Zeal, executive director of payments and digital finance at the FCA, adding that feedback from industry would help shape the final rules.

From advertising to market structure

The consultation marks the next step in the UK’s push towards full “market structure” rules for cryptocurrencies, beyond previous requirements focused on financial promotion and anti-money laundering compliance.

Under the proposal, exchanges would face clearer standards regarding admission, disclosure, and trade integrity. Additionally, measures against insider trading and market manipulation will bring crypto markets more closely aligned with traditional finance.

The consultation also focuses on crypto staking services. The regulator is seeking views on how companies should disclose risks when offering high-yield products that lock up customer assets. The talks also include lending and borrowing of cryptocurrencies, with proposed safeguards aimed at protecting borrowers and lenders.

Another element is decentralized finance (DeFi). The FCA is consulting on whether DeFi activities, including trading, lending and borrowing without intermediaries, should be subject to the same regulatory expectations as traditional financial services.

Talks are ongoing, but Mr Zeal reminded users that the asset is currently unregulated.

“While we are working closely with our partners to deliver UK crypto rules, people should remember that cryptocurrencies are largely unregulated, except for financial promotion and financial crime purposes,” Zeal warned.

Related: UK cryptocurrency lobby joins Digital Chamber of Commerce to drive cross-border policy

UK seeks to extend financial laws to virtual currencies

The consultations began a day after the UK government announced plans to introduce legislation to extend the country’s financial sector laws to cover crypto assets by 2027.

On Monday, the UK Treasury reportedly announced that it would introduce legislation that would bring crypto companies under current financial laws by October 2027. This will bring virtual currencies under the supervision of the FCA.

UK Prime Minister Rachel Reeves said bringing cryptocurrencies within the regulatory framework is an “important step” in securing the UK’s position as a financial center for the digital age.