Laura WilesThe FCA has published a consultation on applying existing Handbook rules to firms conducting cryptoasset activities. Currently, the FCA’s rules for cryptoasset cover financial promotions and preventing financial crime, but its remit will expand under the Treasury’s forthcoming legislation.
High level standards
The FCA proposes to apply fundamental the High Level Standards which underpin obligations applicable to all authorised firms to cryptoasset firms, including the following sourcebooks:
- COND (Threshold Conditions), with no amendments to the substantive requirements;
- PRIN (Principles for Business), to apply with the following exceptions:
- For business with eligible counterparties, PRIN will be disapplied (as with other firms)
- Principles 1, 2, 6 and 9 will not apply to transactions entered into by members of a Cryptoasset Trading Platform (CATP) on the CATP;
- For CATPs with professional clients, Principles 6 and 9 will not apply;
- “Customer” and “client” definitions will be aligned to include holders of qualifying stablecoins; and
- Principles concerning the Consumer Duty are excluded at this stage, but consultation on its extension will take place later;
- GEN (General Provisions), to apply in full; and
- SUP (Supervision Manual), to apply proportionately, except for SUP 16 reporting requirements, which will be subject to consultation later.
Senior management arrangements
The FCA intends to apply the SYSC sourcebook, as well as the associated code of conduct, fit and proper test, and SMCR provisions to cryptoasset firms. These would be applied in a proportionate manner with particular emphasis on operational resilience de to the technical infrastructure dependency of crypto firms. The FCA intends to apply SYSC 10 (conflicts of interests) as it stands for now, but recognises sector-specific risks with crypto business models, and will consult further on specific rules separately.
Generally, crypto firms would be treated as ‘other firms’ under SYSC, rather than ‘common platform firms’ such as banks or investment firms. However, firms with multiple permissions would need to apply with applicable standards, so if a crypto firm also qualifies as a common platform firm, it must meet the higher standards accordingly.
All current SMCR requirements – including senior management functions, certification regime, prescribed responsibilities, and conduct rules – would be applied to cryptoasset firms, alongside the SMCR classification (limited, core, enhanced), with some amendments so that crypto firms can fall under enhanced criteria where appropriate.
Operational resilience
With some adaptations, the FCA proposes to apply the full operational resilience framework under SYSC 15A, and the risk management and outsourcing requirements under SYSC 4, 7 and 8 to crypto firms,
Business Standards
The FCA proposes to apply the ESG sourcebook to crypto firms. Specifically, they will be subject to the anti-greenwashing rule and the sustainability labelling framework. It does not propose to extend provisions applying only to asset managers, asset owners or distributors. There will also not be any cryptoasset-specific climate or sustainability disclosures at this time.
In parallel discussion papers, the FCA is also seeking views on:
- Applying the Consumer Duty and whether crypto customers should be able to refer complaints to the FOS; and
- Approach to applying COBS and PROD to crypto firms.
The call for views on the discussion papers closes on 15 October 2025, and the consultation closes on 12 November 2025.