The Financial Conduct Authority (FCA) published Consultation Paper CP26/4 proposing how the FCA Handbook would apply to firms and individuals carrying on newly regulated cryptoasset activities in the UK, alongside related non-Handbook guidance. The package covers the Consumer Duty, complaints and redress, conduct of business requirements, SM&CR tiering, training and competence, regulatory reporting, and safeguarding rules for client cryptoassets, including specified investment cryptoassets. Key proposals include applying Principle 12 and PRIN 2A (the Consumer Duty) to cryptoasset firms with supplementary guidance, while excluding the Duty from trading between participants on a UK qualifying cryptoasset trading platform (UK QCATP) and applying it to retail market business involving UK-issued qualifying stablecoins, including designated activities for public offers and admissions to trading. The FCA would apply DISP 1 complaints handling requirements and extend the Financial Ombudsman Service compulsory jurisdiction to complaints about all new regulated cryptoasset activities carried on from a UK establishment, while not extending Financial Services Compensation Scheme coverage. Conduct of Business Sourcebook (COBS) requirements would be applied by expanding “designated investment business” to include the new cryptoasset activities, with targeted disapplications and adaptations including disapplying COBS 5 and COBS 15 for cryptoasset activities and strengthening appropriateness testing by requiring firms to ask questions covering at least the matters in COBS 10 Annex 4G, which would be converted into a rule, alongside new appropriateness expectations for cryptoasset lending and borrowing. The paper also proposes SM&CR Enhanced thresholds of more than GBP 65bn (three-year rolling average) for stablecoin backing asset pools and more than GBP 100bn for cryptoasset custodians based on client cryptoassets held on trust plus safe custody assets, and a phased data approach with baseline activity returns (generally quarterly) and more frequent safeguarding returns (monthly). For custody, amended CASS 17 rules would require client cryptoassets to be held on a non-statutory trust, permit a limited “operational surplus” of firm cryptoassets within trust arrangements where necessary, and allow UK CATP operators using a settlement float model to hold up to 1% of each client’s cryptoassets outside the trust with explicit consent, with the same CASS 17 framework proposed to apply to specified investment cryptoasset custody. Responses are requested by 12 March 2026, with final rules and guidance to be published in subsequent Policy Statements once the FCA has considered feedback across its Crypto Roadmap consultations.

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