FCA Consults on Applying Existing Rules to Crypto asset Firms

 

On 17 September 2025, the Financial Conduct Authority (FCA) published Consultation Paper CP25/25, seeking feedback on how existing Handbook rules should apply to crypto asset firms under the nearing crypto asset regime.

The consultation proposes extending core requirements on governance, systems and controls, consumer protection and operational resilience to crypto asset firms, mirroring the approach taken with traditional investment services.

 

Changes for Crypto asset Firms

The FCA intends to apply high-level standards such as the Threshold Conditions, Principles for Business (PRIN), General Provisions (GEN) and Supervision (SUP) Sourcebooks to crypto asset firms.

Within PRIN, definitions of ‘customer’ and ‘client’ may be broadened to capture holders of qualifying stablecoins. Certain Principles may not apply to crypto asset trading platforms (CATPs) dealing only with professional clients, but they will continue to apply where retail customers are involved.

The Senior Management Arrangements, Systems and Controls (SYSC) framework would also extend to crypto asset firms, covering risk management, internal audit, conflicts of interest and whistleblowing. In addition, the Senior Managers & Certification Regime (SM&CR) is proposed to apply, scaled proportionately to firm size and complexity.

 

Operational Resilience and ESG

The FCA has highlighted specific risks for crypto asset firms, including private key security, validator risks, reliance on third-party distributed ledger technology (DLT) providers and blockchain forks. For firms offering custodial staking, validator nodes may be treated as ‘important business services’ under resilience requirements.

The ESG Sourcebook is also proposed to apply, ensuring that environmental or sustainability-related claims are fair, clear and not misleading. At this stage, no new climate or sustainability disclosures are being introduced due to ongoing data challenges in the sector.

 

Feedback for the FCA

The FCA is seeking industry feedback on three key issues:

• Consumer Duty: Whether the duty should apply in its current form, with possible sector-specific guidance or whether bespoke rules are more appropriate for these products.
• Complaints and Redress: The potential for crypto asset customers to access the Financial Ombudsman Service (FOS), with the application of DISP rules and possible extension of FSCS protections.
• Product Oversight and Promotions: How existing obligations on product governance, financial promotions and client communications should be adapted to fit the crypto asset market.

 

Why This Matters for Your Firm

These proposals represent a significant step in aligning crypto asset firms with the broader regulatory framework. Firms should begin reviewing governance arrangements, senior management accountability, operational resilience planning and customer-facing processes to ensure they are prepared for the likely changes.

Please contact us at info@objectivus.com if you have any questions or require further clarity on the points raised.