The UK FCA seeks opinions from the crypto industry to promote investment rule reforms and strengthen risk management

The UK's Financial Conduct Authority (FCA) has released a discussion paper and a consultation paper proposing several reforms aimed at "enhancing the investment culture in the UK," and is officially seeking feedback from the crypto industry.

The FCA stated that it intends to adjust customer classification and rules related to conflicts of interest while "broadening consumer investment channels." The FCA pointed out that the poor investment performance on high digital participation (DEP) applications is almost entirely due to trading in crypto assets and contracts for difference (CFDs). Regulators emphasized that some users are making investments through "crypto asset proxy products" without limits, risk warnings, or suitability tests, posing significant potential risks.

In the consultation paper, the FCA suggested new guidelines: for clients whose main investment history is concentrated in high-risk speculative assets or crypto assets, this should not be considered as evidence of "having professional investment capability," unless they have sufficient evidence to meet the professional investor threshold, including the ability to bear potential losses.

The FCA stated that this reform aims to simplify the regulatory framework, placing clearer review responsibilities on institutions rather than relying on past "more arbitrary tests." The regulatory body requires businesses involved in the consultation or sale of crypto assets to submit feedback by February and March of next year.

In recent years, the UK has gradually advanced the modernization of crypto regulation, including officially recognizing digital assets as "property" in 2024, providing clearer legal grounds for cases such as theft and bankruptcy. At the same time, the government is also assessing whether to ban donations of crypto assets to political parties.