CryptoUK Response to FCA Consultation Paper CP25/40 Regulating Cryptoasset Activities
On 16 December 2025, the Financial Conduct Authority (FCA) published a coordinated package of three crypto consultation papers, setting out the next phase of the UK’s digital asset regulatory framework. CP25/40 “Regulating cryptoasset activities” focuses on bringing core cryptoasset activities into the UK regulatory perimeter, including trading platforms, intermediation, lending and borrowing, custody, and related conduct standards. It forms a central part of the proposed framework for how crypto firms will be authorised, supervised and held to conduct expectations comparable to traditional financial services.
Key highlights from our response:
We recognise that international harmonisation is a priority for the FCA. We support alignment with international standards, while maintaining scope for divergence where appropriate. In our view, an equivalence-based approach would be the most effective way to support cross-border activity and reinforce the UK’s competitiveness. We urge the FCA to commence this process as soon as possible.
We also highlighted the need for greater clarity in terminology. The Consultation Paper alternates between “consumer” and “retail client”. While “consumer” is a statutory term, the distinction between consumer, retail and professional client categories should be clearly articulated. Ambiguity creates uncertainty around disclosure, suitability and conduct obligations, particularly for firms operating across jurisdictions. Updated guidance clarifying whether professional clients may fall within the definition of consumers would be helpful.
In addition, we identified areas requiring further clarification. The paper does not confirm whether offering loans to retail clients in the form of cryptoassets constitutes consumer credit lending. While lending and borrowing activities are addressed in part, the application of the consumer credit regime remains a recognised grey area under existing regulation and would benefit from explicit guidance.
We also asked how tokenised peer-to-peer loans fit within the proposed legislative framework, given that they are neither specified investment cryptoassets nor “transferable” under the definition of qualifying cryptoassets. Clarification here would help define the regulatory perimeter with greater certainty.
