The Financial Conduct Authority (FCA) has recently finalized its conduct rules concerning UK qualifying cryptoasset trading platforms (QCATPs), as well as frameworks for cryptoasset intermediaries, lending and borrowing, staking, and safeguarding. Additionally, this policy statement provides clarity on the FCA’s interim approach toward decentralized finance (DeFi) and its regulatory stance on international firms.
These finalized proposals were not consolidated in a singular FCA consultation paper but were instead derived from several documents, including CP25/14, CP25/40, and CP26/4. For those interested in more detailed breakdowns of these proposals, recordings of our recent webinars cover the emerging UK crypto regime, which can be accessed here. Further insights on CP25/40 are discussed in our blog post titled UK Future Crypto Framework: FCA Consultation Paper on Regulating Cryptoasset Activities (CP25/40).
Guidelines for Cryptoasset Intermediaries and QCATP Operators
The final rules indicate that the FCA has opted to relax certain stipulations pertaining to the operational structure and trading processes of cryptoasset trading platforms. Key adjustments include:
- The removal of pre-trade transparency requirements for firms acting as principal in transactions.
- New provisions for post-trade transparency have been designed to allow for delayed publication under specific circumstances.
- Obligations surrounding best execution have been recalibrated to align more closely with those applied to traditional intermediaries, enabling firms to demonstrate that their execution policies yield equivalent or superior results compared to UK-authorized venues where applicable. However, there is no mandate to execute on these authorized venues.
- Best execution rules will not be enforced for UK QCATPs engaged in matched principal trading on their own platform; the FCA has indicated plans to consult regarding a deferred mechanism for execution policies in September 2026.
- Pre-trade disclosure obligations are not required for UK QCATPs during matched principal trading on their own platforms.
- Legal entity separation won’t be mandated for principal dealers, who will, however, not be permitted to transact on their own platforms.
Concerning retail trade access, firms are allowed to engage in cryptoasset transactions for UK retail clients only if the asset has been approved for trading on a retail UK QCATP and has a corresponding disclosure document available. There are plans for a deferral on certain execution-venue requirements to be discussed in September of this year.
Safeguarding Provisions
The FCA has introduced specific exceptions to trust requirements and has detailed the scope of control-based applications. Additionally, the allowed amount of own funds that can be utilized to bolster a settlement float model has been increased to 2% of safeguarded cryptoassets. A flexible approach has been adopted towards private key management technologies. The FCA further intends to consult on the custody of tokenized assets and potential adjustments to the Client Assets Sourcebook (CASS) regulations.
At this juncture, compliance with CASS 17 will not be required for relevant specified investment cryptoasset (RSIC) custody. Consequently, firms aiming for authorization as cryptoasset custodians must meet the requirements that apply under CASS 6 for specified investments rather than the more specialized CASS 17 rules.
Staking Regulations
Amendments have been made to the staking rules to prevent unintended limitations on automatic staking operations. The FCA now allows consent for ongoing staking of both current and future holdings, with conditions set for annual notifications. Clarifications on record-keeping requirements for liquid staking models have also been established.
Lending and Borrowing Adjustments
The FCA has enacted specific modifications to collateral requirements. Notably, it permits the staking of retail client collateral under CASS 17, while also clarifying that restrictions on automatic collateral top-ups target firms, leaving clients free to augment their positions manually.
Decentralized Finance (DeFi) Considerations
Regarding DeFi, the FCA maintains a policy that applies regulations where a clear controlling entity exists, adopting a tailored, case-by-case approach. Further guidance on DeFi practices will be discussed in forthcoming consultations slated for later this year.
International Operations
For international firms, the FCA will refrain from providing detailed guidelines on particular business models, which will be assessed individually. The policy statement outlines conditions under which these firms may operate in the UK via a branch alongside a UK legal entity. Dual-regulated firms may conduct their operations through a UK bank if the Prudential Regulation Authority confirms that all thresholds and ongoing requirements are satisfied. Notably, international QCATP operators are not obligated to maintain a separate UK order book, which had been a point of confusion in feedback received.
Finally, rules from the Conduct of Business Sourcebook (COBS) and the Dispute Resolution: Complaints Sourcebook (DISP) that apply to international QCATPs authorized through a branch will exclusively pertain to users based in the UK. This aligns with the FCA’s ongoing commitment to ensuring consumer protection, as currently outlined in consultation paper CP26/23. International firms should also be aware of the FCA’s finalized guidance FG26/7 that details its approach to international cryptoasset entities.
