The UK Financial Conduct Authority (FCA) published a consultation and discussion paper on 17 September 2025 outlining its proposals for applying the rules and guidance in its Handbook to cryptoasset firms (CP25/25). The proposed rules would apply to firms that have obtained authorisation to carry on the new regulated cryptoasset activities set out in the April 2025 draft Statutory Instrument (SI), once the SI is in force (see our client briefing for further discussion on the SI here).
We have covered various of the more concrete proposals for rules and guidance in our earlier blog post on CP25/25 which you can read here – this post covers the two discussion chapters in CP 25/25 which appear to be open to a wider variety of approaches. In these discussion chapters, the FCA is seeking feedback on the application of specific rules to cryptoasset firms and setting out its early thoughts on the potential application of those rules. Responses to the discussion elements of CP25/25 will inform the proposals set out in future consultation papers that are due to be published under the Crypto Roadmap (which is summarised in our blog post here).
Although tentative proposals are set out in the discussion chapters, those chapters are primarily focused on highlighting the issues where additional stakeholder input is required in order to inform subsequent proposals. In short, this captures how the Consumer Duty and access to the Financial Ombudsman Service are expected to apply to cryptoasset activities, and also the application of the conduct of business, product intervention and product governance rules.
Consumer Duty
The discussion in CP25/25 emphasises that the FCA wishes to ensure appropriate protections and to secure good outcomes for consumers in relation to cryptoasset activities. However, the unique nature of cryptoassets makes it challenging for the FCA to achieve those objectives. Although it has not finalised its view, the FCA’s current proposal is to apply the Consumer Duty to all regulated cryptoasset activities and publish additional guidance explaining how it should be applied. The FCA considers that there would be significant benefits in applying the comparable standards of consumer protection across all newly regulated cryptoasset activities and that not doing so could cause confusion for firms and consumers. However, another option would involve disapplying the Consumer Duty for cryptoasset firms and introducing new rules that achieve an appropriate standard of consumer protection while accommodating the unique features of cryptoasset activities.
The relevant discussion chapter notes that cryptoasset firms are likely to face practical challenges in attempting to comply with the Consumer Duty. For example, it would be difficult for firms to conduct a fair value assessment of most cryptoassets given their high volatility and lack of inherent value. However, where cryptoassets are backed by assets that have an underlying value, such as qualifying stablecoins, it would be easier for firms to comply with the fair value rule.
On that basis, a third approach could involve applying the Consumer Duty only to activities undertaken in respect of appropriate types of cryptoassets. Bespoke rules could then be applied to activities carried on in respect of other cryptoassets that pose challenges to firms attempting to comply with the Consumer Duty.
Finally, CP25/25 also clarifies that the FCA does not propose to apply the Consumer Duty to trading between participants of a qualifying cryptoasset trading platform; this is comparable to its treatment of multilateral trading facilities in traditional finance.
FOS and DISP 1
The FCA tentatively proposes to apply complaints handling rules from chapter 1 of the Dispute Resolution: Complaints Sourcebook (DISP), as well as rules governing access to the Financial Ombudsman Service (FOS), to all new regulated cryptoasset activities. However, this is subject to the receipt of feedback on the discussion questions. In particular, the FCA recognises that this approach may prove impractical in the context of (i) overseas firms, given that the jurisdiction of the FOS is predominantly limited to the UK, and (ii) third-party firms, on the basis that a complainant may not always have an eligible relationship with an authorised firm where a third party acts on behalf of the authorised firm. The FCA also mentioned international comparisons, i.e. how other regimes approach access to alternative dispute resolution mechanisms. This is a clear link to the FCA’s secondary objective to facilitate the international competitiveness of the economy of the UK.
COBS
As part of CP25/25’s more developed proposals (i.e. not in the discussion chapters), the FCA proposes to extend its Handbook glossary definition of “designated investment business” (DIB) to include cryptoasset regulated activities. The consequence of this would be that various Conduct of Business Sourcebook (COBS) requirements that apply to firms’ DIBs would also apply to cryptoasset regulated activities. The FCA’s initial proposals are that various COBS requirements applying to firms’ DIBs would apply to these firms, but not all. The FCA’s intent is that DIB-related COBS requirements would be supplemented by bespoke rules for the new cryptoasset regulated activities.
Other COBS rules would apply to cryptoasset firms with some modifications, or only in respect of certain cryptoasset activities, while a handful of other COBS rules would be disapplied entirely for cryptoasset firms. For example, the FCA indicates that in relation to COBS 4 (communicating with clients) (i) UK‑issued qualifying stablecoins may be removed from the “restricted mass‑market investment” category and would therefore not be subject to the additional marketing restrictions, due to having a comparatively lower risk profile relative to other cryptoassets, but that (ii) qualifying stablecoins not issued by an FCA-authorised issuer would include additional risk warnings (e.g. to warn customers that the issuance of such stablecoins is not regulated in the UK). Another example is that the FCA is considering whether to apply the guidance contained in COBS 10 Annex 4G on designing robust assessments as a rule, which would require firms to design questions for the appropriateness test covering all matters currently set out in COBS 10 Annex 4G.
Product intervention and product governance
The Product Intervention and Product Governance Sourcebook (PROD) is focussed on strengthening in-scope firms’ product oversight and governance. The FCA is considering the application of PROD, as it has seen harm occur in the cryptoasset sector when products or services were poorly designed or widely distributed to customers for whom they were unsuitable.
Under the new regime, we expect authorised cryptoasset firms – whether acting as manufacturers or distributors – to maintain effective governance throughout the product and service lifecycle. In particular, the FCA is keen to ensure these products and services are designed and distributed to meet the needs of their “target market”.
The FCA has identified numerous challenges that firms would face if they tried to apply PROD to cryptoassets. For example, PROD 3 requires firms to establish systems and controls that are capable of managing a product throughout its lifecycle – however, many cryptoassets, such as Bitcoin, are created and distributed by decentralised networks or anonymous issuers. This makes it difficult to determine who regulatory obligations should apply to. Further, for certain cryptoassets, such as stablecoins, fungibility and transferability mean that products sold initially to non-retail customers can easily be sold on to a retail customer over the lifetime of the product. Given those difficulties, the FCA has floated the possibility of neither (i) applying the existing provisions of PROD nor (ii) designing a new chapter in PROD for firms that provide cryptoasset products or services. The FCA is seeking feedback on whether relying on the Consumer Duty may be sufficient to achieve its product governance outcomes, or whether bespoke rules and guidance are needed.
However, as noted above, it is uncertain whether the Consumer Duty will be applied to any or all types of cryptoassets. It is therefore unclear at this stage whether the FCA’s product governance outcomes can be achieved by adopting a unified approach in respect of all cryptoassets, or if different approaches will be required for different types of cryptoasset.
Next steps
The publication of CP25/25 is the latest instalment in the government’s ongoing efforts to implement a regulatory framework aimed at supporting growth in the UK crypto sector.
The deadline for submitting responses to the discussion chapters of CP25/25 is 15 October. 12 November 2025 is the deadline for respondents to comment on any of the other proposals set out in CP25/25.
As mentioned, we have published another blog post covering the firmer proposals set out in CP 25/25, which is available here.