FCA’s CP26/4 Crypto Rules Could Reshape UK Market

FCA releases CP26/4, a consultation discussion that suggests extensive crypto regulation: Consumer Duty, dispute resolution, and the necessity of firms establishing a UK presence.

FCA has published a Consultation Paper CP26/4, providing a broad regulatory frameworks of cryptoasset activities. Cryptocurrency companies in the UK will be forced to undertake significant operational changes.

According to Hogan Lovells, some of the areas tackled by the consultation are implementing Consumer Duty on crypto services and new requirements on complaint-handling. Companies must be ready to face new regulations.

Consumer Protection Takes Center Stage

FCA will levy Consumer Duty on crypto companies to make them similar to traditional financial companies. Companies should also offer clear product features and fair value.

The consultation identifies manufacturers as issuers of stablecoins, crypto lending platforms, and trading platforms that provide services.

The UK distributors will have additional responsibilities. They should consider products of uncontrolled foreign traders and make sure that the consumers are aware of the hazards.

Dispute Resolution Brings New Uncertainty

Crypto activities will now be covered by the Financial Ombudsman Service, which can award up to £350,000. This creates an ambivalence among local crypto companies.

According to Hogan Lovells, the conventional investment firms are concerned about this shift because FOS is based on reasonableness and not strict rules. The same will be the case with crypto firms.

FCA does not cover crypto activities by FSCS, and therefore, no customers have any opportunity to request compensation due to investment losses. Instead, the regulator will pay attention to conduct and disclosure.

International Firms Must Establish UK Presence

None of the foreign crypto companies is allowed to provide crypto services to UK clients unless they establish legal entities in the UK, including retail and wholesale businesses. This is more stringent than in conventional finance.

The FCA provides few exemptions on trading platforms; branches are allowed to provide global liquidity in certain situations. UK entities, however, are required to deal with other obligations like safeguarding.

Comments on CP26/4 close March 12, 2026. Final rules will be published by FCA later that year. The authorization gateway opened on September 30, 2026, and the regime started on October 25, 2027.

Custodians holding assets exceeding 100 billion sterner rules and the issuers of stablecoins needing backing pools exceeding 65 billion provoke additional Senior Manager requirements.

The consultation establishes reporting prerequisites in phases. FCA will use varied metrics in three years, and new software will assist in flexible reporting.

The retail-facing activities, dealing, safeguarding, and staking, are subject to training and competency rules. Exempt from wholesale-only.