- UK’s FCA to ban retail investors from borrowing money via credit cards to buy crypto.
- New rules target trading platforms, lenders, and DeFi to curb market abuse and protect consumers.
- Retail access to high-risk crypto services will be restricted, and firms must register and operate under UK oversight.
The UK’s Financial Conduct Authority (FCA) has proposed to stop consumers from borrowing money, including using credit cards, to invest in cryptocurrencies. The measure is part of a wider set of rules to bring most of the crypto market under the regulator’s oversight for the first time.
The FCA cited growing concerns about unsustainable debt levels and consumer vulnerability as key reasons for proposing the crypto borrowing ban. These specific worries become especially sharp when crypto asset values fall unexpectedly. A recent YouGov survey backs this up revealing that in the 2022-’23 period, the proportion of UK consumers using borrowed funds to buy crypto rose from 6% to 14%.
Platform Requirements Under New Rules
The new proposals aim to regulate trading platforms, intermediaries, lenders, and decentralized finance (DeFi) systems if there is a “clear controlling person.” Companies wanting to offer crypto services to users in the UK must operate through a legal entity authorized right there in the country.
Retail investors will also be barred from accessing high-risk crypto lenders, such as Celsius Network, which collapsed in 2022. Additionally, staking services must reimburse users for losses resulting from third-party actions.
The FCA will require crypto platforms to:
- Treat all trades equally
- Separate proprietary trading from client trading
- Ban payments to intermediaries for order flow
- Ensure pricing and trade execution transparency
Related: FCA Targets 2026 for UK Crypto Regulation as 7 Million Users Drive Demand
Stricter Rules for Retail vs. Professional Investors
Meanwhile, retail investors will face tighter restrictions than professionals. However, individuals can opt to be treated as “elective professional clients,” provided they meet at least two of three criteria:
- Over £500,000 available for investment
- 10+ trades per quarter in the past year
- At least one year of financial sector experience
FCA executive director David Geale emphasized the regulator’s intention to balance innovation and protection. Geale noted that while crypto represents a potential growth area for the UK, it must be developed responsibly.
Industry Pushback and Support
Notably, crypto companies have long criticized the FCA for a high rejection rate in its anti-money laundering registration scheme. The rate reached 86% in the year to April 2024, although it has since fallen to 75%. Despite this, many industry leaders expressed cautious optimism.
Related: UK Gets Its First Low-Cost Crypto ETPs as WisdomTree Lands FCA Approval
Joey Garcia, head of public affairs at Gibraltar-based Xapo Bank, viewed the FCA’s move toward regulation as a major step toward legitimacy for the sector. Others, including Riccardo Tordera-Ricchi of the Payment Association, pointed to the practical challenges the regulator may face in implementing its proposals.
Notably, the FCA has opened a consultation on the proposals, with companies and stakeholders invited to respond by June 13, 2025.
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