Crypto Rules Shake UK Markets: A Dostoevsky Tale

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In the dim glow of the digital era, FCA releases CP26/4, a consultation paper that speaks of sweeping crypto regulation: Consumer Duty, a tribunal of disputes, and the stubborn necessity that firms plant themselves on British soil.

FCA has published CP26/4, a sprawling map inked with the fear and hope of a thousand boardrooms. The crypto frontier, once a playground of shadows and quick fortunes, is to be braided into a regulation that drapes itself over every transaction, every wallet, every whisper of risk. The billboards promise order; the alleyways whisper of change that bites.

According to the lawyers’ after-dinner philosophy, Hogan Lovells, the paper will press down on crypto services with a Consumer Duty, and new requirements on complaint-handling. Firms, darling souls, must steel themselves to face rules that arrive with the punctuality of a hangman’s clock.

You might also like: A rumor from foreign shores-Russia plans late June vote on a comprehensive crypto regulation bill-a reminder that regulation travels on the same wind as speculation, but with less romance and more paperwork.

Consumer Protection Takes Center Stage

The FCA intends to lay a heavy hand called Consumer Duty upon crypto companies, seeking to mold them into the semblance of traditional financial institutions. Features must be clear, value must be fair, and the moral economy of the consumer must be polished until the shine hides the teeth beneath.

The consultation identifies manufacturers as issuers of stablecoins, crypto lending platforms, and trading platforms that provide services. In a sense, the stage is set for actors who write the future in the ink of markets, and yet the ink dries quickly.

UK distributors will bear additional responsibilities. They should consider products of uncontrolled foreign traders and ensure that consumers are made aware of the hazards-the hazards, as if the world itself were a hazard wearing a polite suit.

Dispute Resolution Brings New Uncertainty

Crypto activities will now be under the wing of the Financial Ombudsman Service, which can award up to £350,000. A sum both generous and absurd, like a reward for a crime whose victim is still counting the coins in a dream.

According to Hogan Lovells, the traditional investment firms are uneasy about this shift because the FOS acts by reasonableness rather than rigid rules. The crypto firms, too, will learn that the road to settlement is paved with negotiations and uneasy compromises, not with certainties carved in stone.

FCA does not cover crypto activities by FSCS, and therefore, no customer has the opportunity to claim compensation for losses from investments. Instead, the regulator watches conduct and disclosure, as if honesty were a virtue that can save a market from itself.

International Firms Must Establish UK Presence

None of the foreign crypto companies may provide crypto services to UK clients unless they establish legal entities in the UK, covering both retail and wholesale businesses. A demand more stringent than many a fortress of conventional finance, as if the island itself were a discipline that must be humbled by presence.

The FCA grants few exemptions on trading platforms; branches may provide global liquidity in certain circumstances. Yet UK entities are compelled to observe safeguarding and a dozen other obligations, as if the crown itself demanded guardianship over every digital whisper entering the realm.

Comments on CP26/4 close March 12, 2026. Final rules will be published by the FCA later that year. The authorization gateway opened on September 30, 2026, and the regime began on October 25, 2027, like a sunrise that comes with a bill.

Custodians holding assets beyond 100 billion face sterner rules, and issuers of stablecoins with backing pools beyond 65 billion will encounter additional Senior Manager requirements. Numbers, they say, are the most merciless of cognitive tortures-yet they do not lie to you in your sleep.

The consultation outlines reporting prerequisites in phases. The FCA will use varied metrics within three years, aided by new software intended to render flexible reporting-as if truth could be coaxed into a dashboard and made to smile for auditors.

The retail-facing activities, including dealing, safeguarding, and staking, will be subject to training and competency rules; wholesale-only exceptions are not the escape hatch they once imagined.

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2026-02-01 10:00