The United Kingdom is preparing one of the most significant shifts to its investment landscape in recent years. The Financial Conduct Authority (FCA) has released new proposals aimed at “strengthening the UK’s investment culture” and has invited companies working with digital assets to participate in open consultations. Firms can submit their feedback throughout February and March 2026, creating a rare opportunity to influence rules that could reshape the wider European market.

Data reveal risks of crypto exposure in retail apps

FCA analyses indicate that “virtually all underperformance” among users of investment apps with high levels of digital engagement is linked to trading cryptocurrencies or contracts for difference. The regulator also warns about the growing use of cryptoasset proxies – instruments that mirror crypto volatility but are not subject to investment limits, warnings, or suitability tests. This trend, FCA says, may pose meaningful risks to retail investors.

A new definition of a professional investor

One of the central proposals introduces stricter criteria for client categorisation. FCA states that a personal trading history focused on speculative, leveraged, or high-risk products – including cryptocurrencies – will no longer qualify a client as a professional investor. Such experience must be supported by additional factors, especially the investor’s capacity to absorb losses. The aim is to eliminate arbitrary tests and strengthen firms’ responsibility when assessing product suitability.

What FCA expects from firms

The consultation covers all entities that advise on or sell digital asset products to retail clients. The proposed reforms aim to simplify the current regime while ensuring a market that is safe for consumers and still open to innovation. FCA emphasises that this is not a restriction on crypto, but rather an effort to create a more mature and resilient market structure.

The UK continues to strengthen its status as a crypto hub

In recent years, the UK has become an attractive destination for companies operating in crypto, partly due to regulatory uncertainty in the United States. London instead offers a more predictable environment. In December, the government passed legislation formally defining digital assets as a form of property for the first time – a move that increased legal certainty in insolvency cases and the recovery of stolen cryptocurrencies. Reports also suggest the government is considering a ban on crypto donations to political parties to improve funding transparency.

What the change could mean for investors

If adopted, the proposals will give retail investors clearer risk assessments and stronger safeguards against unsuitable products. Crypto companies will have the opportunity to shape future rules and strengthen their position in a market that is rapidly professionalising. The consultations scheduled for February and March 2026 could become crucial for the future of cryptocurrency regulation in the UK and Europe, as well as for the role these assets play in retail portfolios.

Sources:

https://www.fca.org.uk/news/press-releases/fca-sets-out-landmark-package-boost-uk-investment-culture

https://www.fca.org.uk/publication/discussion/dp25-3.pdf