Response to FCA CP25/40, Regulating Cryptoasset Activities

Bitcoin Policy UK responded to the Financial Conduct Authority's consultation paper CP25/40 on regulating cryptoasset activities, focusing on how the proposals apply to Bitcoin. It argues that the FCA continues to treat cryptoassets as a single category, when Bitcoin has no issuer, foundation or controlling entity and is traded globally with deep liquidity. The response broadly supports authorising firms that run cryptoasset trading platforms for UK customers, especially where they hold customer assets or control listings and market structure. It asks the FCA to write a clear distinction between custodial intermediaries and non-custodial software into its rules, so that open source developers, node operators, miners and users of non-custodial wallets are not caught by obligations designed for firms.

It asks that location and authorisation rules apply only to firms with controlling persons and a meaningful UK connection, and warns that requiring UK-only price sources for best execution could cut UK customers off from global liquidity and worsen outcomes. On retail protection, it argues that harm has concentrated in issuer-driven tokens, leverage, custody failures and conflicts of interest, and that classing Bitcoin as a “restricted mass market investment” alongside riskier tokens can mislead consumers. It also warns that over-prescriptive rules push activity offshore, where UK consumers are less protected.