"UK Regulators to Rein in Crypto Chaos with 2026 Overhaul"

The UK Financial Conduct Authority (FCA) has initiated a comprehensive regulatory overhaul of the cryptocurrency sector, with a target of full regulatory oversight by 2026. The proposals, outlined in a series of consultation papers, aim to align the crypto industry with established financial regulations while accounting for its unique risks and operational challenges. The FCA’s strategy centers on governance, operational resilience, consumer protection, and financial crime prevention, reflecting a broader global trend toward formalizing crypto regulations.

Under the new framework, the FCA plans to extend its regulatory Handbook to crypto firms, covering governance, financial crime prevention, and operational resilience standards. This includes applying the Senior Managers and Certification Regime (SMCR), which will hold individuals accountable for the actions of their firms. The regulator is also considering integrating the Consumer Duty—a regulatory obligation requiring firms to deliver positive outcomes for consumers—into the crypto regime. If adopted, this would mark a significant shift in how retail investors are protected in the digital asset space.

Operational resilience is a key focus of the FCA's proposal, particularly in light of past incidents where cyberattacks and system failures caused significant harm to investors. The regulator is requiring firms to implement robust cybersecurity and contingency measures to mitigate the risk of disruptions. This is a direct response to the sector’s history of volatility and instability, with the FCA emphasizing that while its proposals will not eliminate all risks of crypto investing, they will ensure firms meet minimum standards of resilience and governance.

The FCA has also signaled its intention to bring cryptoasset disputes under the Financial Ombudsman Service (FOS), creating an independent avenue for consumers to resolve conflicts. This move aligns with the regulator’s broader goal of increasing accountability and transparency in the industry. The consultation process for these proposals, which closed in late 2025, has provided industry stakeholders with the opportunity to shape the final regulatory framework before its implementation in 2026.

Beyond its domestic agenda, the FCA is collaborating with the U.S. Treasury to harmonize regulatory approaches to cryptoassets, particularly in the stablecoin sector. UK Chancellor Rachel Reeves and U.S. Treasury Secretary Scott Bessent recently convened with major financial and crypto firms to discuss how a shared regulatory framework could foster innovation while maintaining market integrity. The discussions highlight a growing transatlantic effort to position the UK and U.S. as leaders in the global fintech landscape.

The FCA’s proposed rules are expected to result in higher compliance costs for crypto firms, estimated at £92.6 million annually. However, the regulator argues that the benefits—such as reduced consumer harm and increased trust—will outweigh these costs, with expected savings for consumers reaching £130 million. The regulatory shift is also likely to influence the UK’s broader economic strategy, with the government seeking to attract U.S. investment and retain homegrown crypto talent amid a competitive global market.

As the final regulatory framework takes shape, the FCA continues to emphasize a balanced approach that supports innovation while ensuring market stability. The proposed regime reflects a recognition that while cryptoassets present distinct challenges, they also offer opportunities to redefine financial services in a digital-first era.