The U.K. Financial Conduct Authority (Financial Conduct Authority) has moved crypto regulation into its final design stage by publishing Consultation Paper CP26/4, outlining how the Consumer Duty and core conduct standards will apply to cryptoasset firms.
The consultation marks the last major step in the FCA’s multi-year crypto roadmap, shifting from conceptual oversight to enforceable operational rules. Once finalized, the framework will define how crypto firms must treat customers, manage assets, and resolve disputes across the U.K. market.
What CP26/4 Proposes
The FCA is inviting feedback from industry participants until March 12, 2026, before locking in the final rulebook.
Consumer Duty Comes to Crypto
Under the proposal, cryptoasset firms would be held to the same Consumer Duty standard already applied across traditional financial services.
This requires firms to:
- Act in good faith
- Avoid foreseeable harm
- Support customers in achieving their financial objectives
The FCA made clear that crypto will no longer be treated as an exception to consumer-first regulation.
Scope of the New Conduct Rules
CP26/4 applies across the full operating stack of crypto firms, including:
Conduct of Business (COBS)
Firms must ensure:
- Transparent pricing
- Clear, non-misleading disclosures
- Accessible customer support and communications
Dispute Resolution
Crypto activities would fall under the Financial Ombudsman Service (FOS), giving consumers a formal route to escalate complaints.
Credit Card Use
The FCA confirmed it will not ban credit card purchases of cryptoassets, a point closely watched by exchanges and payment providers.
Safeguarding Client Assets
Client crypto must be held in trust-based structures. Firms may maintain limited operational “floats” of up to 1% strictly for settlement purposes.
Regulatory Timeline: 2026-2027
The FCA laid out a clear transition schedule for firms:
- September 2026 – Application gateway opens for crypto permissions
- Late 2026 – Final policy statements and rule text published
- October 25, 2027 – Full regime becomes mandatory
By the final deadline, all crypto service providers, including those already registered under U.K. anti-money-laundering rules, must be fully authorized to continue operating.
What Regulation Will, and Won’t, Protect
While the FCA said the framework is designed to create a “cleaner market,” it emphasized that regulation does not remove investment risk.
Notably, cryptoassets will not be covered by the Financial Services Compensation Scheme (FSCS). If a regulated crypto firm fails, customers should not expect compensation for losses.
Why This Matters
CP26/4 effectively ends regulatory ambiguity for the U.K. crypto sector. Once implemented, crypto firms will operate under bank-grade consumer standards, while investors gain clearer protections, but without government-backed loss guarantees.
The consultation outcome will determine how competitive, compliant, and accessible the U.K. crypto market becomes heading into 2027.
