UK’s Crypto Landscape: What’s Changing and Why it Matters
Across the board, UK authorities are moving quickly to bring crypto within the regulated perimeter of both banks and consumer-facing firms. The Bank of England (BoE) has signalled a clearly cautious and restrictive approach to how banks may hold and interact with unbacked crypto assets, targeting new capital, disclosure, and risk-management regimes by 2026.
In parallel, the Financial Conduct Authority (FCA) is advancing consultations to govern stablecoin issuance, custody services, trading platforms, and consumer protections, with feedback windows closing this summer and final rules expected next year.
Meanwhile, Ripple has increased its public advocacy efforts, most recently at its 18 June London Policy Summit, where it presented a four-point plan urging the UK Government and regulators to move quickly, align with global standards, accelerate the development of stablecoin frameworks, and address barriers to tokenisation to help the UK capitalise on its “second-mover advantage” in digital assets.
Here are four key UK market takeaways:
1. Bank of England: Restrictive Bank Crypto Rules by 2026
The BoE has publicly framed crypto-assets, especially unbacked tokens like Bitcoin and Ether, as a high-risk asset class requiring “a more restrictive approach” for prudentially regulated firms.
- Capital requirements: Senior BoE officials are exploring applying capital charges of up to 1,250% on unbacked crypto exposures, effectively capping direct holdings by making them prohibitively expensive.
- Disclosure & reporting: From 2026, banks will need to enhance transparency around crypto-asset exposures, via granular reporting of positions and stress-testing practices.
- Risk-management frameworks: New rules will mandate bespoke operational, cyber-security, liquidity, and concentration-risk controls tailored to digital-asset activities.
2. FCA: Consultations on Stablecoins, Custody & Consumer Protections
While the BoE focuses on banks, the FCA is simultaneously charting a regime for the wider crypto industry and retail market:
- Stablecoin regime (CP28/25): Published 28 May, the FCA’s consultation paper proposes strict governance, reserve-backing, and redemption standards for stablecoin issuers—feedback closes 31 July 2025.
- Trading platforms & custody: Earlier this month, the FCA sought input on regulating crypto trading venues and custody service providers, emphasising anti-money-laundering controls and market-abuse safeguards.
- Consumer protection measures: Alongside prudential proposals, the FCA is considering bans on leveraged crypto derivatives, restrictions on lending/staking products, and enhanced risk disclosures for retail clients.
- Roadmap alignment: These initiatives feed into the wider FCA “crypto roadmap”, with final rules anticipated in 2026 to dovetail with the BoE’s bank-focused timeline.
3. Ripple’s Four-Point Policy Recommendations
At Ripple’s 18 June London Policy Summit, held with the UK Centre for Blockchain Technology and Innovate Finance, the company unveiled a public whitepaper of four urgent recommendations:
- Act at pace: Finalise a coherent crypto-asset framework quickly to capture investment and innovation opportunities.
- Global interoperability: Align UK rules with international standards (e.g., MiCA, Basel crypto-asset guidelines) to avoid fragmented requirements.
- Advance stablecoin regulation: Permit overseas-issued stablecoins to operate domestically without onerous local-issuance constraints.
- Tackle tokenisation barriers: Remove legal, tax, and operational hurdles in tokenising traditional assets to position the UK as a leader in digital securities.
4. Recent Developments (Past Two Weeks)
Several newsworthy updates underscore the fast-moving nature of the regulatory debate:
- Coinbase lobbying: Coinbase CEO Brian Armstrong met UK policymakers to urge a fast-track approach to crypto rules and tax transparency.
- Industry concern over delays: A new Official Monetary and Financial Institutions Forum (OMFIF) analysis warned that UK “policy procrastination” risks ceding ground to the EU’s MiCA and the US GENIUS Act.
- FCA-BoE stablecoin collaboration: Reports confirm the FCA and BoE are co-developing a unified regime for stablecoins and custody, with feedback open until 31 July and finalisation due in 2026.
- WisdomTree ETP readiness: Digital asset manager WisdomTree says institutional investors are poised to buy UK-listed crypto ETPs “within weeks,” pending FCA approval.
Implications and How StarCompliance Can Help
UK banks and crypto firms must now align roadmaps for internal risk frameworks, capital planning, and customer-facing offerings to these dual tracks of BoE prudential limits and FCA market/consumer rules. Engaging now in FCA consultations and BoE discussions will be crucial for shaping workable standards that enable growth without compromising stability.
- Integrated Risk Management: By integrating with StarCompliance’s (Star) Enterprise platform, firms can embed crypto-specific operational, cyber, and liquidity-risk rules into existing compliance workflows, meeting the BoE’s call for tailored risk-management frameworks.
- High Transparency & Reporting: Star’s configurable reporting engine can generate granular disclosures of employee and firm holdings, aligning with the BoE’s planned enhanced reporting requirements from 2026 onwards.
- Accelerating Ripple’s Call for Speed, Interoperability & Tokenisation: Ripple’s four-point plan emphasises rapid rulemaking, global standards alignment, and overcoming tokenisation barriers—areas where Star’s SaaS platform empowers clients by enabling compliance teams to easily configure new crypto rules and by providing a multi-jurisdictional rule library covering UK, EU (MiCA), and US regimes to maintain consistent workflows across borders.
- Expert Advisory & Benchmarking: Star offers ongoing best-practice insights drawn from its Annual Crypto & Compliance Market Study, helping clients benchmark their policies against peers and proactively close any gaps.
By embedding Star’s Crypto Pre-Clearance, post-trade monitoring, policy automation, and acquisition-enhanced tokenisation tools, UK banks and crypto firms can confidently navigate the evolving BoE and FCA landscape, turning restrictive mandates into growth-enabling guardrails.
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