It was announced by Britain’s financial regulator on Friday that new measures would soon be introduced to limit consumers’ ability to use credit cards for purchasing cryptoassets and to restrict access to crypto lending products. These steps have been proposed as part of a broader initiative aimed at increasing consumer protection, coinciding with the first effort to bring the crypto sector under formal regulatory oversight in the United Kingdom.
This development followed the finance ministry’s declaration earlier in the week, in which it was stated that cryptocurrencies and related services would be brought under compulsory regulation. It was indicated that exchanges, brokers, and crypto issuers would be expected to operate under the existing financial rulebook, which governs traditional financial institutions. The decision had been taken in response to the rapid expansion of the crypto market and its rising integration with the wider economy, despite the absence of clear safeguards.
According to the Financial Conduct Authority (FCA), the popularity of cryptocurrency trading has grown substantially, with approximately seven million individuals—or roughly 12% of the adult population—reported to own cryptoassets in the United Kingdom. However, despite this surge in participation, the market had remained largely unregulated. The FCA reiterated its long-standing warning that individuals investing in cryptoassets should be prepared to lose the entirety of their funds, given the speculative and volatile nature of the sector.
In line with the introduction of new regulatory frameworks, the UK government revealed its intention to address misconduct within the crypto industry while maintaining space for innovation and responsible business practices. It was stated that legislation would be drafted to help eliminate “bad actors” while fostering the growth of credible projects that contribute to financial innovation. These new measures were described as necessary to establish the foundational infrastructure of accountability and transparency in the industry.
In the consultation paper released by the FCA, it was proposed that limits could be imposed on retail investors who attempt to fund crypto purchases with borrowed money. Among the options being evaluated was the restriction of credit card usage for the direct purchase of cryptoassets. Additionally, the use of credit lines provided by e-money institutions for similar purposes was also being considered for potential prohibition.
Exceptions to these restrictions were expected to apply to stablecoins—digital tokens designed to maintain a fixed value relative to traditional currencies, such as the U.S. dollar—provided these were issued by FCA-regulated entities. Consumers, under the proposed framework, would still be permitted to use borrowed money for the purchase of these regulated stablecoins, given their lower risk profile compared to other cryptoassets.
The regulator cited findings from a recent survey it had commissioned, which revealed that 14% of crypto investors had used credit to fund their purchases in the previous year. This represented a significant rise from the 6% reported in 2022, highlighting a growing trend of high-risk financial behavior. The FCA expressed concern that such borrowing practices exposed consumers to amplified financial losses, especially in an asset class known for its unpredictability.
In addition to limiting the use of credit, the FCA announced that restrictions on crypto lending and borrowing were also being contemplated. Under these proposals, enhanced due diligence would be required from service providers, which could include credit assessments and evaluations of an individual’s investment knowledge and experience before being granted access to lending platforms.
Cryptoasset lending typically involves investors allowing their holdings to be loaned out in exchange for yield or interest. Conversely, crypto borrowing allows consumers to receive loans denominated in cryptoassets, which must be repaid over time with interest. These mechanisms, while innovative, were considered to pose substantial risks when left unregulated, as they often involve counterparties operating in opaque or lightly supervised environments.
The FCA’s consultation was launched with the goal of gathering feedback from industry participants, investors, and stakeholders on how best to implement these measures without stifling responsible growth. It was emphasized that these actions were not intended to ban crypto activity, but rather to create a safer and more transparent environment in which consumers could participate with greater confidence and reduced exposure to financial harm.
As the UK positions itself as a leading jurisdiction for fintech and digital asset innovation, the balance between protection and progress will remain central to the policy debate. The outcomes of the consultation and the eventual legislative actions are expected to shape the future of cryptocurrency usage in Britain for years to come.
