The UK Financial Conduct Authority (FCA) has released a discussion paper outlining several proposals and inviting public feedback on crypto regulations in the country. Notably, one proposal seeks to ban public crypto offerings from unregulated companies.
Cryptocurrency Public Offers Draw FCA’s Attention
According to the FCA, the proposals – detailed in a discussion paper titled “DP24/4” – aim to reduce the risks associated with digital assets while encouraging growth and innovation within the sector. This paper is aimed at investors, crypto firms, industry groups, and other technical bodies involved in the virtual asset space.
One proposal that is attracting significant attention is a possible ban on the provision of public tangible goods. The UK government’s economic and financial department, HM Treasury, is pushing to ban most public crypto fundraising, with the possible exception of companies already operating in the UK or those that qualify under certain exemptions.
The FCA’s move is in line with a broader effort by regulators around the world to tighten controls on unregulated lending, which is often associated with fraud, investor losses, and market manipulation.
The draft law is expected to legalize the ban, marking a significant regulatory change. The development follows FCA’s recent raid on Solana-based platform Pump.fun, which was prohibited from operating in the UK due to its failure to obtain the necessary approval.
Beyond the proposed ban on public offerings, the FCA has also proposed that authorized digital asset trading platforms share market abuse data to identify and deal with suspicious activity. This initiative aims to improve transparency and improve the security of users in the crypto sector.
The discussion paper also invites feedback on market acceptance, disclosure procedures, and approaches to market abuse. The FCA has set a deadline of March 14, 2025, for stakeholders to submit their views and opinions.
Some European countries have also called for global cooperation when it comes to regulating digital assets. For example, countries such as Denmark, Italy, and the Netherlands are combining to implement tax monitoring rules to better align with European Union (EU) tax standards.
The State of UK Digital Assets: Regulatory Overreach or Necessity?
This paper is part of a wider effort to define UK crypto regulatory law, with more papers expected to follow. Notably, draft legislation is expected next year, with the full regulatory framework scheduled to be implemented in 2026.
The timing of the discussion paper coincides with growing concerns about poor regulatory compliance among digital goods companies. The latest report revealed that around 90% of digital goods companies in the UK fail to meet anti-money laundering (AML) standards. Regulators are concerned that convenience could expose the financial system to illegal activities, including fraud and money laundering.
In October, the FCA was urged to investigate short video hosting platform TikTok further allegations of operating illegally as a cryptocurrency trading platform. These incidents underscore the growing need for watchdogs to protect financial markets.
Despite the regulatory challenges, adoption of virtual assets in the UK remains strong. According to the FCA reportaround 7 million UK adults currently own digital assets.
While the FCA’s push for stricter rules is aimed at protecting market participants, it faces the challenge of avoiding extreme measures that could drive digital asset businesses to move to more crypto-friendly areas. For example, the US has seen renewed hope following the election victory of pro-crypto candidate Donald Trump. At press time, Bitcoin (BTC) is trading at $105,998, up 3.1% in the last 24 hours.
Featured image from Unsplash.com, Chart from TradingView.com
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