On 23 January 2026, the Financial Conduct Authority published a consultation paper, CP 26/4 addressing how the FCA Handbook will apply to regulated cryptoasset activities. The consultation paper addresses the following areas:
Consumer Duty
The FCA sets out how the Consumer Duty framework will extend to cryptoasset firms. The consultation includes supplementary non-Handbook guidance designed to assist firms in meeting the duty's core objective of achieving positive outcomes for retail customers engaging with cryptoasset products and services.
Redress and Dispute Resolution
The consultation addresses the regulatory framework for handling customer complaints and providing appropriate remedies. The proposals aim to establish transparent mechanisms through which consumers can seek resolution when disputes arise.
Conduct of Business Standards (COBS)
The FCA proposes extending established conduct of business obligations to cryptoasset activities. Chapter 4 of the consultation paper contains a comprehensive table identifying which COBS provisions will apply to cryptoasset firms, including financial promotion requirements applicable to various categories of qualifying cryptoassets. Firms will be required to satisfy both COBS obligations and the specific requirements contained in the new CRYPTO sourcebooks.
Credit for Crypto Purchases
The consultation includes proposals on the use of credit to acquire cryptoassets.
Training and Competence
The FCA outlines standards regarding the knowledge and skills for personnel involved in the provision of cryptoasset services to retail clients. The proposals seek to ensure that individuals managing and operating crypto businesses possess appropriate expertise.
Senior Managers and Certification Regime
The consultation explains how the FCA intends to categorise cryptoasset firms within the existing SM & CR framework.
Regulatory Reporting
The FCA sets out data submission obligations for cryptoasset firms. These reporting requirements are designed to enable the regulator to monitor sector-wide risks and conduct effective supervision of authorised firms.
Cryptoasset Safeguarding
The consultation extends safeguarding obligations to firms undertaking multiple regulated cryptoasset activities and details the FCA's proposed approach to custody arrangements for specified investment cryptoassets. Chapters 9 and 10 address requirements applicable to qualifying cryptoasset custodians and specified investment cryptoasset custodians, firms engaged in custodial staking, cryptoasset trading platforms (CATPs) and intermediaries offering custody services, together with provisions governing cryptoasset lending and borrowing arrangements.
Retail Collateral Treatment
The FCA proposes safeguards governing the treatment of collateral provided by retail consumers in cryptoasset borrowing transactions.
Location Policy Guidance
Annex 4 of the consultation paper sets out the FCA's approach to international cryptoasset firms conducting the activities specified in table 1 of that Annex. Firms assessing whether UK regulatory requirements apply to their operations should evaluate:
- the nature and scope of their activities against the definitions of regulated activities;
- applicable exclusions under the government's legislation (such as group activity, temporary settlement arrangements, absence of holding out, and introducing exclusions);
- the composition of UK client base and whether the "carrying on regulated activities in the United Kingdom" test is satisfied; and
- whether activities meet the "by way of business" threshold.
For firms seeking UK authorisation to serve UK clients, the FCA will generally require them to have a UK legal entity, being a UK individual, partnership, body corporate or unincorporated association formed under the laws of any part of the United Kingdom.
Limited exceptions may apply where the FCA determines that overseas cryptoasset firms serving UK customers through a UK branch may be authorised as CATP operators. Such authorisation requires the home jurisdiction to maintain regulatory protections and requirements that the FCA considers comparable. A UK branch is defined as one or more permanent places of business located in the UK, lacking independent legal personality, and legally dependent on the international cryptoasset firm.
The consultation provides an example of a legal entity structure the FCA considers capable of meeting regulatory objectives. Under this model, an international crypto firm would maintain both a UK branch and a UK legal entity. The UK branch would undertake functions integral to CATP operations, facilitating interaction between UK investor orders and overseas investor orders. This arrangement could enable UK investors to access enhanced pricing and execution quality compared with participation in segregated liquidity pools. The UK legal entity would conduct other regulated activities including safeguarding.
The FCA will assess the proposed legal structures of cryptoasset firms on an individual basis at the authorisation gateway and during supervision to verify compliance with threshold conditions and general requirements. The consultation closes on 12 March 2026.
About LawBEAM
LawBEAM's leading crypto team has extensive experience helping firms navigate complex legal and regulatory change. We represent UK and international crypto firms and advise on legal and regulatory strategy that positions our clients for success in international markets. Please contact our team to discuss how we can support your legal and regulatory needs
