The UK government is set to implement tighter regulations on the crypto market, with a focus on safeguarding retail investors. As part of these measures, consumers may soon be barred from using credit cards and certain lending services to purchase cryptocurrencies, according to a new proposal from the Financial Conduct Authority (FCA).
This development follows the finance ministry’s recent announcement to bring cryptoassets under formal regulatory control. The proposed rules will bring crypto exchanges, service providers, and token issuers in line with existing financial oversight frameworks.
With an estimated 7 million adults in the UK currently holding cryptoassets—roughly 12% of the population—the FCA aims to protect individuals from the volatility and risks that continue to define the crypto space. The watchdog has consistently warned investors that they should be prepared to lose all the money they put into digital assets.
In its newly released consultation paper, the FCA outlined potential restrictions, such as banning the use of credit cards and credit lines issued by e-money firms to directly purchase cryptocurrencies. However, it signaled that regulated stablecoins—crypto tokens pegged to fiat currencies and issued by authorized institutions—may be exempt from this rule.
The proposed guidelines come as data shows a sharp increase in the use of borrowed funds for crypto investment. In 2023, 14% of crypto users bought digital assets using credit, more than doubling from 6% in 2022.
The FCA is also evaluating whether to introduce stricter rules for crypto lending and borrowing activities, citing risks such as loss of control over assets, insufficient borrower vetting, liquidity challenges, and widespread consumer misunderstanding. These activities may be subject to credit assessments and knowledge checks for retail participants, though institutional investors would likely retain broader access.
Additionally, the regulator wants to improve public understanding of staking, a process where users lock tokens in blockchain networks in exchange for rewards. A recent survey revealed that more than a quarter of UK crypto holders engage in staking, underscoring the growing complexity of investor behavior.
Legal experts say the FCA faces a delicate balancing act—encouraging responsible innovation while enforcing strong investor protections. “Striking the right balance won’t be simple,” noted Hannah Meakin, a partner at Norton Rose Fulbright. “The effectiveness of these rules will become clear only after they are tested in the real world.”
