The United Kingdom continues to plot out its regulation in the years ahead governing cryptocurrencies and digital assets.

Late last month the UK government announced its draft legislation for the crypto sector, following “discussions in Washington between the Chancellor and the US…”=

Now the British financial regulator, the Financial Conduct Authority (FCA), announced the issuing of a discussion paper, seeking feedback on rules to ban investors from using borrowed funds, such as credit card balances, to invest in cryptocurrency.

Discussion paper

The FCA said that “clear crypto regulation will boost confidence in the sector, supporting growth,” which is why it is “seeking views on intermediaries, staking, lending and borrowing, and decentralised finance.”

With more people using credit to purchase crypto, the FCA said that its discussion paper also considers whether restrictions should be applied in that area.

“Crypto is a growing industry. Currently largely unregulated, we want to create a crypto regime that gives firms the clarity they need to safely innovate, while delivering appropriate levels of market integrity and consumer protection,” said David Geale, executive director of payments and digital finance at the FCA.

“Our aim is to drive sustainable, long-term growth of crypto in the UK,” said Geale. “We’re asking whether we have got the balance right.”

This discussion paper is the latest policy publication in the FCA’s Crypto Roadmap which provides a timeline for consulting on future crypto regulation.

Other areas in the roadmap include market abuse and admissions and disclosures, stablecoins and custody, and prudential considerations.

The deadline for views on the FCA’s discussion paper is 13 June 2025.

The FCA will consult on the final regime later this year, having considered the feedback from this discussion paper, it said.

Crypto regulation

The FCA plan comes soaring values of virtual currencies have placed pressure on financial regulators, including the FCA, to take clear set out the groundwork for the industry to flourish.

A recent YouGov survey, reportedly found that the proportion of people in the UK using borrowed funds to make crypto purchases more than doubled from 6 percent in 2022 to 14 percent last year.

And it should be remembered that high profile figures have reservations about the crypto sector.

The UK’s governor of the Bank of England (BOE), Andrew Bailey, for example has frequently expressed his reservations and warnings about crypto in previous years.

Long time coming?

Despite this, the UK has been plotting how best to regulate the crypto sector for a while now.

The UK had launched a consultation on crypto regulation in early 2021 that was mostly focused on stablecoins.

Then in April 2021 the Bank of England set up a taskforce to look at the case for a new “Britcoin”, or central bank-backed digital currency.

In December 2022 it was reported that HM Treasury was finalising sweeping new powers for the Financial Conduct Authority (FCA) to properly regulate the cryptocurrency industry.

This included limits on foreign companies selling into the UK, provisions for how to deal with the collapse of companies, and restrictions on the advertising of products.

Then in November 2024 the FCA had warned that “crypto remains largely unregulated in the UK and high-risk, but also outlined its ‘roadmap’ for regulation of the sector and provided a timeline detailing key dates and milestones, with the regulatory regime expected to go live in 2026.