UK FCA Explores Flexible Regulatory Approach for Crypto Firms: Consumer Duty Under Review

The UK Financial Conduct Authority (FCA) is actively evaluating the applicability of its Consumer Duty framework to cryptocurrency businesses, signaling a potential shift toward tailored regulatory treatment for the digital asset sector. In a recent consultation paper, the regulator invited feedback from industry participants, legal experts, and consumer advocacy groups regarding whether the stringent Consumer Duty requirements—which mandate firms to prioritize positive consumer outcomes—should be fully enforced on crypto enterprises. This move reflects the FCA’s recognition of the distinctive operational dynamics and risk profiles inherent to digital asset services compared to traditional financial products. Stakeholders have been given until February 2024 to submit their perspectives, with particular emphasis on how these rules might impact innovation, market integrity, and investor protection. The outcome could establish significant precedents for how crypto enterprises are integrated into the UK’s financial regulatory landscape, balancing consumer safeguards with the need for proportionate oversight. This consultation underscores the FCA’s ongoing efforts to adapt its supervisory approach to emerging technologies while maintaining its commitment to market fairness and transparency.