Overview of the FCA's Cryptoassets Regime Policy Statements

The UK is taking a major step forward. With these policy statements, we deliver a significant package as part of the Cryptoasset Roadmap and a comprehensive regime that puts the UK at the forefront of responsible cryptoasset regulation globally.

Summary

This is a significant milestone for the FCA, for the industry, and for the millions of consumers who engage with firms providing cryptoassets services. It represents the culmination of more than 3 years of intensive work: listening to industry, engaging with consumers, collaborating with international partners, and carefully designing a framework that is proportionate and outcomes-focused. This regime sets clear, predictable rules for firms across the full range of regulated cryptoasset activities. It sets standards, strengthens consumer protections, and positions the UK as a trusted, competitive home for responsible cryptoasset innovation. The regime is underpinned by the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (the Cryptoassets Regulations), which were passed by Parliament on 4 February 2026. These Cryptoassets Regulations brought a broad range of cryptoasset activities within the FCA's regulatory perimeter for the first time, moving well beyond the anti-money laundering and financial promotions standards that previously defined our role in this market. The full scope of regulated activities under the regime will expand from 25 October 2027. This gives firms time to prepare and adapt. To prepare for this legislative change, and to develop the future regulatory regime for cryptoasset firms, we have consulted extensively across 4 discussion papers ( DP23/4 , DP24/4 , DP25/1 and CP25/25 ) and 10 consultation papers ( CP25/14 , CP25/15 , CP25/16 , CP25/25 , CP25/40 , CP25/41 , CP25/42 , CP26/4 , CP26/8 and CP26/13 ) since 2023. In this series of policy statements, we summarise the feedback to these CPs. We also set out our final rules and guidance for all cryptoasset firms that will need to be authorised and regulated by us. These policy statements are:

Who this affects

The policy statements apply to firms that carry out, or intend to carry out, one or more regulated cryptoasset activities or designated activities under the Cryptoassets Regulations, as well as:
Firms that are registered with us under the Money Laundering Regulations.
Firms subject to the Financial Promotions regime where they are marketing cryptoassets to UK consumers.
Consumers and firms that use, or propose to use, or interact with, qualifying stablecoins or qualifying cryptoassets.
Issuers of electronic money and payment service providers, where their activities intersect with the cryptoasset regime.
Overseas firms and market participants with an interest in providing cryptoasset services to UK consumers or operating in the UK market.
The policy statements may also interest:
Industry groups, trade bodies and representative organisations in the cryptoasset sector.
Law firms, accountancy firms and other professional advisers providing services to cryptoasset firms.
Auditors providing services to cryptoasset firms.
Traditional finance firms considering entry into, or interaction with, cryptoasset markets. For example, there are interactions between CRYPTOPRU and MIFIDPRU for investment firms.
Consumer groups and organisations representing consumer interests.
Policy makers and other regulatory bodies, in the UK and internationally.
Academics, think tanks, industry experts and commentators.

Who needs to read what

Use this section to understand what policy statements will be relevant to your cryptoasset activities and what you will need to do. The cryptoasset regime introduces a comprehensive set of rules for firms carrying out regulated cryptoasset activities. The rules that apply will depend on the products and services provided by each firm and that firm's business model.

Activity Specific Requirements

Stablecoin Issuers and Custodians should read:
the
Stablecoin Issuance policy statement which covers rules relating to backing assets and safeguarding, redemption requirements, disclosures to holders the joint publication with the Bank of England Link is external relating to dual regulation of systemic stablecoins; and
Section 4 of the joint
Guidance on the operation of the Digital Securities Sandbox Link is external , which has been updated to permit stablecoins to be used as a settlement asset in the Digital Securities Sandbox provided they meet the minimum criteria set out within the guidance Firms providing Cryptoasset Services (trading, dealing, custody, staking or lending and borrowing) should read:
the
Regulated Cryptoasset Activities policy statement which covers activity specific rules for firms who are trading platforms or intermediaries, safeguarding (custody) of client cryptoassets, lending and borrowing, and staking providers Firms Issuing, admitting or trading cryptoassets should read:
the
Admissions and disclosures (A&D) and market abuse (MARC) policy statement , which covers disclosure requirements for offers and admissions, due diligence and admission standards, and market abuse controls

What we are changing

Applying the FCA Handbook

We are applying key FCA Handbook obligations across regulated cryptoasset activities, including the Duty, COBS, SM&CR, operational resilience and financial crime frameworks. Further enhancements include updated Duty and operational resilience guidance, and clarity on the treatment of jointly regulated stablecoin issuers.

Stablecoin Issuance

We have maintained the core framework as consulted on, while improving proportionality and clarity. Key changes include:
Simplifying the backing asset composition requirement by no longer having to estimate redemption forecasts.
Confirming statutory trust arrangements for backing assets and the removal of unallocated backing fund accounts.
Adjusting redemption timelines to ensure they are operationally effective.
Allowing limited intragroup custody subject to safeguards.
Permitting up to a 5% excess to be held in the backing asset pool.
Additional clarity around the application of redemption requirements to the secondary market.
Ensuring holders have access to historical disclosures and strengthening obligations to make sure prospective holders are aware of their withdrawal rights.
The policy establishes a baseline regime for stablecoin issuance, with further work planned as stablecoin use cases (such as use for payments) evolve. Further work is also planned on resolution of stablecoin issuers.

Regulated Cryptoasset Activities

UK QCATP operators & intermediaries (including dealers and arrangers):
We have refined our policy to remove principal dealers from pre‑trade transparency requirements. We have updated guidance to address issues for dual‑regulated firms and provide clearer expectations on best execution, including the use of multiple execution venues for price checks. We have confirmed that best execution requires effective overarching arrangements rather than transaction‑by‑transaction checks, supported by periodic monitoring and post‑trade analysis, while generally maintaining a principles‑based approach rather than introducing more prescriptive requirements. Lending and Borrowing:
We are maintaining core retail protections, including enhanced disclosures, consent, appropriateness testing, record‑keeping, and safeguards such as over‑collateralisation and negative balance protection. We have made targeted amendments to collateral arrangements, including permitting the staking of retail client collateral (subject to CASS 17) and clarifying that limits on automatic collateral top‑ups apply only to firms, without restricting clients’ ability to manually top up positions. Safeguarding:
We are proceeding with the proposed application of CASS 17 to client cryptoassets, with strong stakeholder support for enhanced protections around ownership rights, record‑keeping, reconciliation, and private key management. We have introduced targeted exceptions to trust requirements, clarified the scope of control-based application, increased the percentage limit permitted to facilitate the settlement float model to 2%, and adopted a technology‑agnostic approach to private key management, while planning further engagement on tokenised asset custody and potential future CASS amendments, as well as future consultation on resolution of crypto custodians. We are not proceeding with applying CASS 17 to relevant specified investment cryptoasset (RSIC) custody at this stage. At the outset of the cryptoasset regime, firms seeking to become authorised to provide RSIC custody will need to do so as a cryptoasset custodian but will need to apply the CASS 6 requirements when safeguarding RSICs for the time being. We are also proceeding with our proposal to apply CASS 7 to client money arising, or in connection with, the safeguarding of client cryptoassets, with targeted adjustments to ensure these provisions apply appropriately and avoid duplication or unintended outcomes. Firms carrying on the activity of issuing qualifying stablecoins will not be subject to CASS 7. Staking:
We are maintaining the overarching approach to strengthening retail consumer understanding, including requirements for disclosures, contractual terms and client consent, alongside record‑keeping for all clients. We have amended the rules to avoid unintended restrictions on auto‑staking arrangements, allowing consent to cover ongoing staking of current and future holdings subject to conditions and annual notification. We have clarified how record keeping requirements apply to liquid staking models. Perimeter issues will be addressed through separate guidance. Decentralised Finance (DeFi):
Our rules and guidance will apply to DeFi firms where there is an identifiable controlling entity, consistent with the Treasury defined perimeter. In response to supportive feedback and requests for clarity, we will take a case‑by‑case approach to assessing scope and will consult on tailored DeFi guidance, including objective indicators of decentralisation and expectations for managing operational resilience and financial crime risks, while avoiding overly prescriptive rules that could hinder innovation.

Admissions and Disclosures (A&D) and Market Abuse Regime for Cryptoassets (MARC)

We have maintained the core framework consulted on in CP25/41, while making targeted changes to improve proportionality, clarity and operability.
A&D:
We have clarified requirements relating to due diligence, admission criteria and the trigger for supplementary disclosure documents, specifying a digital token identifier standard (applicable across A&D and MARC), strengthening withdrawal rights notifications, and removing an exception that allowed qualifying cryptoassets to be admitted to trading without a QCDD if they were fungible with those already admitted to trading on the same platform. MARC:
We have retained the industry-led framework and the threshold for large UK QCATP operator obligations, while narrowing the on-chain monitoring requirement for large UK QCATPs, clarifying key requirements relating to inside information disclosure and intermediary notifications to UK QCATPs, refining legitimate market practices and adding examples of inside information.

Prudential

Stablecoin issuance capital requirement:
We have carefully considered the feedback on the calibration of the K-factor for stablecoin issuance, K-SII. We have decided to change the coefficient of K-SII from 2% to 1%. This change makes the prudential framework more proportionate for larger issuers while maintaining the robustness of the overall regime. Market risk and counterparty default risk capital requirements:
We have carefully considered the feedback received about our proposed two-tier classification of qualifying cryptoassets for capital purposes (Category A / B). In response, we have simplified the market risk framework. In the revised framework, cryptoassets that can be prudently valued and are admitted to a UK qualifying cryptoasset trading platform, will be subject to a single 40% net risk position requirement for K‑NCP (net cryptoasset position) and a 40% volatility adjustment for K‑CCD (counterparty credit default). Cryptoassets that do not meet these conditions are deducted from regulatory capital and subject to 100% volatility adjustment for K-CCD. This approach steps away from the more complex categorisation previously proposed while retaining the underlying distinction in risk, providing a clearer and more proportionate framework without weakening the prudential protections it is designed to deliver. Public disclosure of prudential information:
Having considered feedback, we have removed the proposed requirement to publicly disclose the own funds threshold requirement (OFTR) and the liquid asset threshold requirement (LATR). We have also introduced a proportionality framework based on own funds requirements (OFR) for the public disclosure of prudential information. Where a firm’s permanent minimum requirement (PMR) is the binding component of its OFR, then the firm is not required to make the public disclosure. However, the public disclosure is required to be made when the firm’s fixed overheads requirement (FOR) or K-factor requirement (KFR) is the binding component of its OFR.

Cost Benefit Analysis

We have considered feedback and refined our assumptions, inputs and methodology. These changes are intended to improve the clarity, consistency and robustness of our analysis, including by updating certain cost assumptions, incorporating additional stakeholder evidence where relevant, and ensuring greater alignment across the policy statements. These refinements do not materially change the overall conclusions of the CBA. We still anticipate our rules will deliver net positive benefits to market participants. We do not consider that the changes to the rules and guidance, as consulted on, other than those relating to the prudential instrument, are significant for the purposes of s138I(5) FSMA 2000. We are publishing a full cost benefit analysis to meet the requirement in s138I(5)(a) FSMA 2000. Additionally, the amendments to the rules do not have an impact on the compatibility statement(s) set out in the Consultation Papers. For clarity, we have also combined our CBAs produced across our previous consultation papers into a single analysis assessing the impact of our rules.

Next steps

What we will do

We have, and will continue to, support firms who are intending on applying for their Part 4A FSMA authorisation.
There are also a number of additional components of the cryptoasset regime which we have not addressed through these policy statements, and which will be progressed through policy development and further consultation. These components include work across areas such as decentralised finance (DeFi), distributed ledger technology (DLT), cryptoasset derivatives, stablecoin-related policy development, audit requirements and saving and transitional provisions. Savings provisions The savings provisions, set out in the Cryptoassets Regulations, allow certain firms already operating in UK cryptoasset markets to continue specified activities for a limited period while they seek authorisation, subject to defined conditions and time limits. These include transitional and deferral arrangements designed to support an orderly implementation of the regime while maintaining appropriate consumer protections. Resolution We will consult later this year on our proposed approach to managing cryptoasset firm failure. This will include distribution rules that would apply where a stablecoin issuer or a cryptoasset custodian has failed. As part of this, we may consider the rules on suspension of redemption of stablecoins to make sure they achieve their aims, both in firm failure and the run-up to it, and this may result in some changes. Financial Crime We also plan to provide further clarity on financial crime requirements, including the application of AML and KYC obligations, through updates to the Financial Crime Guide. These updates aim to ensure a consistent and comprehensive framework, including clear guidance and practical examples of good and poor practice. We will also consult on these changes later this year. Regulatory Reporting We will continue to develop our approach in areas such as regulatory reporting. Before the regime commences, we will work with firms to develop supplementary questions that will apply from the outset, alongside the baseline and existing returns set out in the policy statements. That work will focus on testing how firms hold the relevant data, refining the wording and definitions of questions, and ensuring the reporting is clear, proportionate and operationally deliverable. This reflects our decision to keep the baseline returns lighter at commencement, so that firms provide the core information we need for supervision without unnecessary burden, while more targeted or detailed metrics are developed with firms where supervisory need justifies them. We will also make available the reporting materials and a version of the reporting interface ahead of commencement, so that firms have early sight of the requirements and time to prepare their systems, processes and controls. Review period We will keep the operation of the rules under review and make further adjustments where necessary. The regime will need to operate for a period before it can be fully assessed, and any proposed changes will be consulted on in the usual way. We also intend to
undertake a formal review of the regime approximately 2 years after it comes into force to assess whether it is delivering its intended outcomes. We will also assess whether any adjustments are needed to make sure it remains proportionate and effective as the market develops. Should we need to make changes we will gather evidence from firms, consumers and wider stakeholders and will consult on any proposed changes in the usual way. The key indicators we will use to assess whether our rules are achieving their intended outcomes will remain as they were set out in our CPs. Our approach to supervision seeks to be proportionate, prioritising key areas of focus and firms that pose a higher risk to our objectives. We also intend to make our areas of focus predictable so that firms have an opportunity to make positive change without the need for regulatory action. Our enforcement approach aims to ensure there are real and meaningful consequences for firms and individuals who do not follow our rules and who cause significant harm to consumers and markets. We consider the deterrent impact of any enforcement action and focus our efforts on achieving impactful deterrence.

What you need to do

We are committed to working with firms throughout the authorisation process and beyond. The steps below set out what firms need to do and how we can help.
Firms that carry out, or intend to carry out, regulated cryptoasset activities should familiarise themselves with the policy statements, rules and guidance relevant to their business models and assess whether they will require FSMA authorisation or a variation of permission under the new regime. In April 2026, the Government published a draft SI proposing to exclude activities involving UK-issued qualifying stablecoins from arranging and dealing, with the intention of bringing these activities under a modernised future payments regime. If implemented, this may affect the regulatory treatment of certain cryptoasset activities and the extent to which they fall within the FCA’s perimeter. Persons carrying out stablecoin-related activities should consider the legislation as in force at the relevant time. To be authorised, a firm must show that it satisfies, and will continue to satisfy, the minimum standards in FSMA (the Threshold Conditions). Existing registrations will not convert automatically. Firms currently registered under FSMA, the Money Laundering Regulations, or authorised under the Payment Services Regulations or Electronic Money Regulations, and firms currently relying on a s.21 financial promotions approver will need to be authorised if they are within scope of a regulated cryptoasset activity. If a firm wishes to rely on the savings provisions, the application window is scheduled to open on 30 September 2026 and close on 28 February 2027. Firms should apply as early as possible within this window to maximise the period during which they can continue operating under the savings provisions while their application is assessed. Firms that apply within the window may, subject to meeting the relevant conditions, continue specified activities under the saving and transitional provisions until a determination is made on their application. Firms that apply after the window closes will not be able to rely on these provisions and may need to cease carrying on relevant activities until they are authorised. Firms may wish to attend our information sessions and consider using the Pre-Application Support Service (PASS) to help prepare a high-quality application. Firms should also consider seeking independent legal and compliance advice when preparing an application. Once authorised, firms must continue to satisfy the Threshold Conditions and comply with all applicable regulatory requirements. This includes complying with applicable rules and reporting requirements that apply to them, maintaining appropriate systems and controls, and engaging openly and cooperatively with the FCA in the course of supervision.

Wider context

Our regulation of the cryptoasset market has developed from regulating firms for Money Laundering Regulations (MLRs) purposes and financial promotions to developing the regime set out in these policy statements.
Since January 2020, cryptoasset businesses operating in the UK (defined in the MLRs as cryptoasset exchange providers or custodian wallet providers) have been required to register with us and comply with the requirements in the MLRs.
Under the Cryptoassets Regulations, firms carrying out newly regulated cryptoasset activities by way of business in the UK will instead be required to be authorised by us under FSMA (unless an exemption applies). These firms will no longer be required to register separately under the MLRs. Over the last few years, we have taken significant steps to strengthen the UK’s regulatory framework for cryptoasset firms. Our aim has been to make sure firms in this space meet appropriate standards and that consumers are protected from harm. We have addressed this both domestically and internationally, leading international initiatives to progress regulation on a global basis. Supervision and innovation remain central to our domestic approach. We seek to promote effective competition and proportionate regulation that supports innovation and entry into UK markets as well as delivering consumer protection. We will continue to monitor firms within the regulatory perimeter, act against those falling short, and work closely with partners to disrupt illegal activity. The world of cryptoassets is evolving at pace, and so is our understanding of how consumers engage with these assets. In December 2025, we published the sixth edition of the FCA’s consumer research on cryptoassets. This research built on previous editions and has helped us develop our understanding of retail consumers’ use of cryptoassets and how to protect them. In October 2025, we lifted the ban on retail access to certain cryptoasset exchange traded notes (ETNs). We have been monitoring market developments since then, and we will keep our position on retail access to cryptoasset ETNs and derivatives under review. Cryptoassets are high risk investments and will remain high risk under our regime. Even in a well‑functioning market, most cryptoassets are highly speculative. As with many high-risk investments, consumers should be aware that they could lose the entire value of their investment. UK‑issued qualifying stablecoins are treated differently under our regime and our final rules will help create stability: they are required to be fully backed and redeemable at par, supporting their use as money‑like instruments. The development of this regime has been a genuinely global effort. We have engaged with regulators, policymakers, and industry participants across major jurisdictions, contributing to and drawing from the work of bodies including the Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO). Domestically, we have worked closely with the Treasury and the Bank of England to ensure coherence across the wider regulatory landscape. We have heard from consumer groups and individual investors about the experiences and concerns of consumers. We are grateful to everyone who contributed – through formal consultation responses, roundtables, bilateral meetings, and ongoing dialogue. This regime is better for that engagement, and we look forward to continuing to
work together as it is implemented and evolves.

Our Strategy 2025–2030

The cryptoasset regime supports
Our Strategy 2025–2030 priorities by:
Supporting sustained economic growth by creating predictable regulation aligned with international standards, enabling well-run firms to innovate, invest, and compete from the UK.
Helping consumers navigate their financial lives by ensuring they are appropriately informed, treated fairly, and able to access products that offer fair value, while being protected from poor conduct and harmful practices.
Fighting financial crime by strengthening firms’ systems and controls to prevent, detect and disrupt fraud, money laundering, terrorist and proliferation financing, and market abuse.
Supporting us in being a smarter regulator by applying the ‘same risk, same regulatory outcome’ principle where possible and, relying on existing frameworks such as the Consumer Duty where appropriate, and ensuring regulation is targeted, effective and proportionate.

Outcomes we are seeking

We want to create a cryptoasset market that supports our strategic objectives in the following ways:
Outcomes we are seeking
Consumer protection
Market integrity
Effective competition
Secondary international competitiveness & growth Consumers are treated fairly, receive fair value and are protected from poor conduct and harmful cryptoassets Yes N/A Yes N/A Consumers are appropriately informed of risks and can make informed choices before investing in or using cryptoasset services Yes N/A N/A N/A Products and services provide fair value, meet consumer needs and are sold fairly Yes N/A Yes Yes Trust and confidence in cryptoasset firms and markets is strengthened Yes Yes Yes N/A Cryptoasset markets are fair, transparent, orderly and resilient N/A Yes N/A Yes Financial crime and market abuse are reduced, making cryptoassets less attractive for illicit activity Yes Yes N/A N/A Market resilience is improved, including reduced firm failure and reduced harm from disorderly failure Yes Yes N/A N/A Firms are well run, with appropriate governance, accountability, systems, controls and sufficient resources to meet regulatory requirements‑ Yes Yes N/A Yes Effective competition delivers innovation, high quality products and services, and a level playing field among authorised firms N/A N/A Yes Yes Proportionate standards support market entry by well-run firms while avoiding unnecessary regulatory burden N/A N/A Yes Yes Innovation and diversity of business models are encouraged within a clear and predictable regulatory framework Yes N/A Yes Yes The UK is an attractive location for cryptoasset firms to establish and operate from, with a physical presence N/A N/A N/A Yes The UK’s international competitiveness and medium to long-term growth are supported through predictable, proportionate regulation aligned with international standards Yes Yes Yes Yes

Measuring success

We will evaluate success using a range of market, firm and consumer- focused indicators aligned with the FCA strategy and the statutory objectives they support. We will also monitor and evaluate the assumptions underpinning our cost benefit analyses over time. This includes through a post‑implementation review of the regime. Strategic outcomes

Summary of feedback

We have engaged extensively with stakeholders and received feedback across the Consultation Papers:
Consultation Paper reference
Number of responses
Groups of stakeholders who responded to that consultation CP25/14: Stablecoins and Custody 80 Cryptoasset firms (29%) Industry associations (22%) Traditional finance firms (19%) Private individuals (12%) Not-for-profit organisations (6%) Legal and consultancy firms (6%) Independent panels (3%) Professional services (3%) CP25/15: Prudential requirements in relation to Stablecoins and Custody 34 Cryptoasset firms (24%) Industry associations (29%) Traditional finance firms (21%) Private individuals (7%) Independent panels (10%) Other (9%) CP25/16: Quarterly consultation paper including details relating to cryptoasset exchange-traded notes 79 Cryptoasset firms (14%) Industry associations (6%) Traditional finance firms (13%) Private individuals (46%) Legal and consultancy firms (9%) Other (12%) CP25/25: Applying the FCA Handbook (Part 1) 34 (DP) 51 (CP) Cryptoasset firms (44%) Industry associations (26%) Traditional finance firms (4%) Private individuals (6%) Legal and consultancy firms (6%) Other (14%) CP25/40: Regulating cryptoasset activities 81 Cryptoasset firms (41%) Industry associations (34%) Traditional finance firms (6%) Private individuals (8%) Legal and consultancy firms (5%) Other (6%) CP25/41: Regulating cryptoassets: admissions and disclosures and market abuse regime for cryptoassets 44 Cryptoasset firms (50%) Industry associations (23%) Traditional finance firms (7%) Private individuals (7%) Legal and consultancy firms (4%) Other (9%) CP25/42: A prudential regime for cryptoasset firms 33 Cryptoasset firms (35%) Industry associations (32%) Traditional finance firms (12%) Independent panels (3%) Other (18%) CP26/4: Application of FCA Handbook for regulated cryptoasset activities (Part 2) 57 Cryptoasset firms (26%) Industry associations (31%) Traditional finance firms (15%) Private individuals (10%) Legal and consultancy firms (13%) Other (5%) CP26/8: Chapter 2: Amendments to CASS related to cryptoasset activities 4 Industry associations (75%) Legal and consultancy firms (25%)

Equality and diversity considerations

We have conducted an Equality Impact Assessment (EIA) as part of the Policy Statement process. Overall, based on our assessment and the available evidence, we do not consider that the rules materially adversely affect any groups with protected characteristics under the Equality Act 2010 (noting that, in Northern Ireland, equivalent antidiscrimination legislation applies). We have considered whether our rules might present challenges or disadvantage to any particular kind of firm, in particular to firms which follow the principles of Sharia-compliant finance and concluded that no direct or indirect disadvantage is caused. In this context, we have carefully considered the risk and liquidity profile of the assets we allow in the backing pool for stablecoins. We consider that the risk and liquidity profile of these assets is appropriate, and are satisfied that it is possible to use or develop products which meet the principles of Sharia-compliant finance within those asset classes. Analysis of data from our Financial Lives Survey (2024) and our cryptoassets consumer research indicates that current cryptoasset ownership is concentrated among younger consumers, men, those with higher-than-average incomes and some ethnic minority groups. While these groups are currently overrepresented, we expect all consumers who interact with cryptoasset firms to benefit from the introduction of a regulatory regime. We have also considered the potential impact on digitally excluded consumers. While cryptoasset services are typically accessed online, we expect firms to consider accessibility and the needs of vulnerable consumers in line with the Consumer Duty. Future regulation of cryptoasset firms is intended to reduce information asymmetries, lower the prevalence of market abuse and provide an appropriate degree of consumer protection. Our research suggests that increased regulation could increase consumer confidence and willingness to invest, particularly where it provides clearer protection. Over time this may contribute to a wider range of consumers engaging with cryptoassets. A broader consumer base may increase the potential for harm, including to more vulnerable consumers. This underlines the importance of proportionate protections. We do not consider that the proposals will adversely affect any groups with protected characteristics, nor do we believe they will negatively impact financial inclusion. As the regime develops, we will continue to consider whether our work could affect the composition of consumers in this market or have implications for equality and diversity.

Environmental, social and governance considerations

Some cryptoasset activities (e.g. including certain transactions involving Bitcoins) involve a significant use of energy. In developing the regime, we have considered the environmental, social and governance implications of our proposals and our duty under ss.1B(5) and 3B(1)(c) of FSMA 2000 to have regard to contributing towards the Secretary of State achieving compliance with the net-zero emissions target under s.1 of the Climate Change Act 2008 and environmental targets under s.5 of the Environment Act 2021. Overall, and given the FCA perimeter set out in the Cryptoassets Regulations, we do not consider that the rules are relevant to contributing to those targets. We will continue to monitor how industry evolves and consider how our rules interact with those targets.

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