FCA opens regulated firms to crypto markets

The Financial Conduct Authority this week issued rules allowing UK-regulated banks, brokers and asset managers to trade, custody and provide services for certain cryptoassets under defined regulatory standards.

The package sets conditions firms must meet before offering trading or safekeeping of eligible cryptoassets. Requirements cover custody arrangements, operational resilience, client disclosure, governance and anti-money-laundering controls. The FCA expects firms to assess risks attached to individual cryptoassets and to show how their systems and controls are adequate for planned activities.

Firms must carry out due diligence on asset models, third-party service providers and trading venues. They must identify and protect client money and assets in line with existing rules. The framework also gives the regulator supervisory powers to monitor compliance and to take enforcement action where standards are not met.

The rules apply to a range of firms already under FCA supervision, including banks, investment firms, brokers and custody providers. Firms expanding into crypto services will need to adapt internal policies, update client disclosures, and change technology and record-keeping systems. The FCA expects firms to provide evidence of implementation during supervisory reviews.

The FCA said it will publish further guidance to clarify technical expectations and will work with firms during the implementation period. Firms may narrow offerings to assets and services for which they can demonstrate controls or seek partnerships with established custodians and trading venues to meet the standards.

Regulatory context for the new rules includes prior FCA actions: the authority tightened controls over the sale of certain crypto derivatives to retail clients and brought cryptoasset businesses under anti-money-laundering supervision, requiring registration for AML oversight.

Market participants and legal advisers will monitor forthcoming guidance and supervisory statements, which will influence how the rules are interpreted and enforced. Firms planning to expand into crypto services must assess readiness, update compliance frameworks and prepare to show the FCA how they will manage custody, operational and financial crime risks.