The Financial Conduct Authority (FCA), the financial regulatory authority of the United Kingdom, is preparing to introduce a series of restrictive measures to limit access to credit for investments in the crypto market.
Among the most significant proposals, the ban on using borrowed funds, including credit cards, to finance the purchase of cryptocurrencies stands out.
According to the Financial Times report on May 2, the FCA intends to strengthen consumer protection in a sector considered to be high-risk and characterized by low transparency.
The initiative is part of a broader plan to regulate the national crypto market. It aims to create a safer and more competitive environment for investors.
The FCA of the United Kingdom ready to ban the use of credit to purchase crypto in investments
David Geale, executive director of payments and digital finance at the FCA, emphasized that cryptocurrencies represent an area of potential growth for the United Kingdom.
However, he reiterated the need to adopt adequate measures to ensure a sufficient level of protection for consumers. “We are open for business,” Geale stated, rejecting accusations that the FCA is hostile to the bull and bear cryptocurrency industry.
The regulatory body has recently published a discussion paper to gather feedback on the future regolamentazione of the sector.
In it, it is read that the FCA is evaluating whether it is appropriate to prohibit companies from accepting credit payments for the purchase of cryptoassets by consumers.
One of the main motivations behind the possible ban is the growing trend of retail investors using credit to finance their investments in cryptocurrencies.
According to research conducted by the FCA, although 72% of users still use disposable income or cash to purchase crypto assets, the percentage of those using credit has increased significantly. That is, from 6% in 2022 to 14% in 2024.
This trend worries the regulatory authority. It fears an increase in unsustainable debt, especially if the value of digital assets were to fall and investors were unable to repay the loans taken out.
The proposed ban would also include the use of credit cards, considered a particularly risky tool for financing volatile investments.
In addition to the ban on loans for the purchase of cryptocurrencies, the FCA intends to introduce a series of stricter rules to regulate the entire crypto ecosystem.
The objective is to regulate not only the trading platforms, but also the intermediaries, the lenders, the borrowers, and the decentralized finance systems (DeFi).
The authority plans to apply stricter rules for services aimed at retail investors, compared to those intended for professional or sophisticated investors.
Focus on consumer protection
Among the measures under discussion, there is the obligation for platforms to ensure fair commercial treatment and transparency on prices and on the execution of negotiations. As well as the separation between proprietary trading activities and those carried out on behalf of clients.
The FCA has identified several critical areas in the cryptocurrency market. Among these are market manipulation, conflicts of interest, regulatory failures, illiquidity, and unreliable trading systems.
To address these issues, the authority intends to ban platforms from paying intermediaries for order flow. Additionally, it plans to prevent users of staking services from receiving reimbursements for losses caused by third parties.
Furthermore, the FCA plans to exclude from the new regulatory regime DeFi systems that do not have a centralized structure or a clear controlling person. Thus recognizing the decentralized nature of these platforms.
A regulatory framework to attract businesses
According to Geale, the ultimate goal of the FCA is to create a solid regulatory framework. That is, one capable of attracting businesses and stimulating innovation in the sector, without compromising investor safety.
“If we can achieve the right regulatory regime, it actually becomes attractive for companies.”
The position of the FCA reflects a balanced approach: on one hand, the desire to promote the development of the crypto sector in the United Kingdom.
On the other hand, the need to prevent retail investors from exposing themselves to excessive risks or dangerous financial practices. Such as borrowing to invest in highly volatile assets.
The new rules proposed by the FCA mark an important step towards greater regulation of the cryptocurrency market in the United Kingdom.
In a global context where regulatory authorities are trying to find a balance between technological innovation and consumer protection, the British initiative could represent a model for other countries.
With the increase in interest in cryptocurrencies from the public and the expansion of crypto services, the need for a clear and rigorous regulatory framework becomes increasingly urgent.
The move by the FCA, if implemented, could help make the market more transparent, responsabile, and sustainable in the long term.