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Cryptoasset Consultation Paper Hat-trick: What We Know So Far

Jan 20, 2026 10:26:05 AM

The FCA’s upcoming cryptoasset regime will bring major changes for firms operating in this space. Here’s what you need to know about authorisation requirements and timelines.

All firms wishing to undertake any regulated cryptoasset activities will need to be regulated by the FCA under FSMA by the start of the new regime in October 2027. This includes firms registered under the MLRs, firms using s.21 approvers for financial promotions and authorised firms who need to extend exisiting permissions.

The application period is expected to open in September 2026. Due to the high-risk nature of cryptoassets, the FCA is likely to want to protect investors and take a risk-averse stance on authorisation, meaning the bar will be set high for firms either applying for authorisation for the first time or extending their permissions.

What We Know So Far

Final policy statements are not expected until later in 2026, however we can gain a solid understanding of the FCA’s expectations from the three consultation papers published in Decmeber 2025:

  • CP25/40 focuses on proposed rules and guidance for some of the new cryptoasset activities;
  • CP 25/41 sets out the market abuse and admissions & disclosures regime for cryptoassets, and;
  • CP25/42 outlines the prudential regime for cryptoasset firms.

Here are the key takeaways from each Consultation Paper:

CP25/40: Trading, Intermediaries, and Services

Cryptoasset Trading Platforms (CATP)

  • Responsibility for implementing cryptoasset Admissions & Disclosures (A&D) and Market Abuse Regime for Crypto Assets (MARC)
  • Must ensure access to fair and orderly markets
  • Must document contractual agreements with market makers
  • Must be a neutral trading venue so cannot be exposed to client or counterparty credit risk
  • Existing PAD rules in COBS 11.7 will apply
  • Post-trade transparency for all firms
  • Requirement to maintain and produce upon request transaction records for at least five years
  • Trades must be finalised in a timely and effective manner, with customers and firms clear on their obligations

Intermediaries

  • May only deal or arrange deals for UK retail customers with cryptoassets admitted to trading on a UK CATP
  • Will have responsibilities to mitigate harm caused by direct retail access, to be expanded in a Consumer Duty CP
  • Existing PAD rules in COBS 11.7 will apply
  • Existing best execution requirements will apply
  • Orders for UK customers must be executed on UK-authorised execution venues
  • Before a cryptoasset can be provided to a UK retail customer, it must trade on at least one CATP and have an A&D compliant qualifying cryptoasset disclosure document
  • There must be a functional separation between proprietary trading operations and client order operations
  • Pre-trade transparency for large intermediaries dealing as principal
  • Post-trade transparency requirements for all firms

Lending & Borrowing

  • Firms must not use proprietary tokens in connection with L&B services
  • Retail customers must be provided with clear information about L&B services and the risks they present each time they wish to engage. This will likely be subject to COBS 10 appropriateness testing obligations
  • Requirement to maintain records for at least five years
  • Firms must obtain consent from retail customers before supplementing the collateral on their behalf, but this must not exceed 50% of the market value of the initial collateral
  • Firms may only provide over collateralised cryptoasset borrowing services

Staking

  • Information must be provided to retail customers on staking services and the risks involved
  • Express permission must be given by retail customers to stake their assets
  • Records of staking must be maintained for at least five years
  • Operational and prudential resilience measures and safeguarding requirements will apply to staking firms in the same way as other cryptoasset firms

Decentralised Finance

  • No bespoke requirements will apply to DeFi firms, they will be required to adhere to the cryptoasset regime

CP25/41: Admissions & Disclosures and Market Abuse

Admissions and Disclosures

  • This regime will apply when:
    • Offering a qualifying cryptoasset in the UK,
    • Disclosing information about an offer of a cryptoasset
    • Disclosing information about a stablecoin
    • Requesting or obtaining admission of a cryptoasset to trading on a CATP
    • Disclosing information about admission or proposed admission of a cryptoasset to a CATP
  • When stablecoins are offered to the public, the issuer must produce a QCDD that will be uploaded to an FCA owned centralised repository
  • The QCDD is specific to UK-issued stablecoins and its purpose is to allow prospective holders to make an informed decision
  • QCDDs are exempt from s.21 restrictions on financial promotions
  • CATPs must carry out due diligence before admitting a cryptoasset to trading

Market Abuse Regime for Cryptoassets (MARC)

  • The regime will cover the following areas:
    • Prohibition of insider dealing
    • Prohibition of unlawful disclosure of inside information
    • Disclosure of inside information requirements
    • Prohibition of market manipulation
  • CATPs and intermediaries must maintain systems to prevent, detect and monitor market abuse. This includes PAD arrangements, employee training, information barriers and surveillance arrangements
  • Intermediaries required to notify CATPs when they suspect an order or transaction constitutes market abuse – the FCA will not receive or investigate STORs, unless both the CATP and intermediary have failed to prevent, disrupt or deter the market abuse
  • Large CATPs must participate in cross-platform information sharing

CP25/42: Prudential Requirements

  • The basic liquid asset requirement will be the same as COREPRU and MIFIDPRU
  • Firms only need to complete one consolidated overall risk assessment (known as ICARA process for MIFIDPRU firms)
  • Firms must operate with a minimum level of own funds ranging from £75k to £750k depending on the firm’s regulated activities
  • Firms must publicly disclose some of their prudential information

Preparing for the New Regime

There is a tight turnaround time between finalised policies being produced and the regime going live in October 2027, with responses to the consultation papers due by 12th February 2026 and finalised policy statements expected after Q2 2026.

Firms that start planning early will be better positioned to avoid last-minute pressure and costly mistakes. This includes reviewing existing permissions, identifying gaps in systems and controls, and preparing documentation for the FCA’s high standards.

How Thistle Initiaitives Can Help

We can support your firm in preparing for the new cryptoasset regulatory framework by:

  • Creating and implementing frameworks so that compliance is built in from day one
  • Supporting your application for FCA authorisation
  • Assisting with the transition into becoming a fully authorised firm
  • Providing technical support for pre- and post- trade reporting

Get in touch today to discuss how we can help your firm navigate the new regime.

Meet the Expert

Melissa Buckingham headshot

Melissa Buckingham, Compliance Consultant  LinkedIn

Melissa joined Thistle Initiatives in 2025, bringing with her a strong background in managing conflicts of interest and cross-border regulatory activity from her time at a Tier 1 bank.

With a deep understanding of both the regulatory landscape and operational pressures facing firms, Melissa adopts a thorough and detail-oriented approach to helping clients achieve and maintain compliance. She supports clients across a range of sectors, but primarily in the investments and wealth management space.