CryptoUK

CryptoUK Response to FCA Consultation Paper CP26/4 – Application of FCA Handbook for Regulated Cryptoasset Activities (Part 2)

Jonathan Marriott — Thu, 12 Mar 2026 12:19:38 +0000

On 23 January 2026, the Financial Conduct Authority (FCA) published CP26/4: Application of the FCA Handbook for Regulated Cryptoasset Activities – Part 2.

This consultation sets out how key sections of the FCA Handbook would apply to firms undertaking regulated cryptoasset activities under the UK’s forthcoming regulatory framework. The proposals cover a broad range of regulatory requirements, including Consumer Duty, Redress and Dispute Resolution (DISP), Conduct of Business Standards (COBS), training and competence requirements, the Senior Managers and Certification Regime (SM&CR), and regulatory reporting obligations (SUP 16). The consultation also includes proposals relating to cryptoasset safeguarding, retail collateral treatment in cryptoasset borrowing, credit used for crypto purchases, and location policy guidance.

CP26/4 builds on earlier consultations that form part of the wider UK cryptoasset regulatory framework, including proposals on stablecoin issuance and custody, prudential requirements for cryptoasset firms, the regulation of cryptoasset activities, and admissions, disclosures and market abuse requirements for cryptoassets. The FCA has indicated that it plans to open its authorisation gateway for firms applying for cryptoasset permissions in September 2026, ahead of the new regulatory regime coming into force on 25 October 2027.

Summary of our response

We would like to thank all members who participated in the drafting of this response, as well as the team at CMS for their continued support in our regulatory engagement. Our submission highlights several key recommendations and requests for clarification from the regulator that could impact our members and the broader approach to the UK cryptoasset regulatory framework:

International firms

While we appreciate the FCA’s effort to provide clarity in relation to the territorial scope of the regime in respect of international firms, we would be grateful for clearer guidance in relation to the rules that would apply to overseas firms, particularly branch-authorised QCATPs, serving both UK and non-UK users. We believe that the application of UK rules should be limited to UK consumers, and should not inadvertently apply to overseas firms’ non-UK customers simply because the service they receive relies on the authorised firm’s shared infrastructure and liquidity pool. Moreover, applying UK rules extraterritorially would diverge from established UK cross-border principles and could result in duplicative or conflicting conduct obligations for services that are already regulated under the client’s home jurisdiction.

Consumer Duty

While we appreciate the FCA’s guidance in seeking to clarify the application of the Duty’s cross cutting obligations and outcomes in relation to cryptoasset firms, we note that many of the “good practice” suggestions may not be appropriate expectations for firms that operate execution only or non-advised business models (such as CATPs), compared to firms providing advisory or portfolio management services. Further guidance may therefore be necessary to ensure that firms understand the FCA’s expectations in relation to particular activities, including those involving a greater or lesser degree of discretion or personalised customer engagement.

Reconsideration of the RMMI classification

The FCA has stated it does not have “evidence to support switching off the financial promotions rules” where qualifying cryptoassets could be ‘downgraded’ from RMMI status. We respectfully disagree. Our response to question 16 makes the case for revisiting the RMMI designation under the new regime. In particular, we believe that the FCA’s supervision of cryptoassets in relation to the new regime’s prudential standards, safeguarding, disclosures, operational resilience and governance requirements, will more effectively achieve the outcomes sought under the original RMMI regime. Additionally, we believe that consumer risk will be more effectively mitigated through regulation of the intermediary, rather than through marketing restrictions based on the intrinsic characteristics of the asset alone.

Safeguarding requirements under CASS 17

Whilst we are broadly in agreement with these proposals, there are a number of specific issues which we would appreciate further clarity on to ensure the rules operate coherently across custody models:

CASS 17.3.3R requires that a trust is created in relation to safeguarded cryptoassets, including where the custodian only has control over the assets by virtue of holding the “means of access” (private keys). This means that a person will technically be safeguarding where they have control over the means of access but do not otherwise hold the actual cryptoassets. If the cryptoassets are held with another custodian, it is unclear how the person that is “safeguarding” simply by virtue of holding the private keys could be expected to create a trust over the actual cryptoassets.
CASS 17.3.6(1)(b) provides an exception to the trust requirement where necessary for certain services, however it is unclear what evidence would be expected from firms when relying on the exception. Given the diversity of transaction flows in cryptoasset markets, clarity on evidentiary expectations would support consistent application.
While we broadly agree with the proposals in relation to record keeping and reconciliations, topping up shortfalls and removing excesses, we would appreciate specific guidance that better reflects the operational realities of cryptoasset firms, such as multi-wallet structures, cross-chain movements, and timing differences arising from settlement cycles or network congestion.

Click here to download our full response

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Banning Crypto Donations Won’t Solve the UK’s Political Finance Problem

Jonathan Marriott — Wed, 11 Mar 2026 14:14:12 +0000

Calls from MPs to restrict or ban cryptocurrency donations to political parties are growing louder. Concerns about foreign interference in political finance are real, and policymakers are right to scrutinise potential vulnerabilities in the systems that underpin democratic institutions.

But as the debate gathers momentum, an important question risks being overlooked.

If donations processed through regulated crypto exchanges are considered too risky to accept, what does that imply about political donations flowing through the wider financial system? After all, both ultimately rely on regulated intermediaries and the same fundamental safeguards: verifying the identity of donors, ensuring they are permissible under UK law, and maintaining transparency around the source of funds.

The central policy question is therefore not whether risks exist — they do, and they must be taken seriously.

The real question is whether banning crypto donations meaningfully reduces those risks, or whether it simply targets a new form of financial technology while leaving the underlying challenges of political finance unchanged.

Why Crypto Donations Have Become a Political Issue

The debate around crypto donations has intensified as policymakers across Westminster examine how foreign actors might attempt to influence democratic institutions.

Recent discussions in Parliament and scrutiny from committees examining national security and political finance have raised concerns that cryptocurrency could potentially obscure the origin of donations or allow funds to move across borders in ways that are harder for authorities to detect.

These concerns generally fall into three areas.

First, some policymakers worry that cryptocurrency could enable anonymous donations, making it difficult to identify the true source of funds.

Second, there are concerns that cryptoassets could facilitate cross-border financial flows that might bypass existing safeguards designed to prevent foreign influence.

Third, some critics point to tools such as mixers or privacy technologies that can obscure transaction histories.

These concerns are not unreasonable. Protecting the integrity of democratic institutions requires strong safeguards to ensure that political donations are transparent and lawful.

The key question, however, is whether banning crypto donations would actually address these risks.

How Political Donations Are Already Regulated in the UK

To understand the debate around crypto donations, it is important first to understand how political donations are already regulated in the UK.

Political donations are governed primarily by the Political Parties, Elections and Referendums Act (PPERA), which establishes a framework designed to ensure transparency and prevent foreign or illicit influence.

Under these rules, political parties must ensure that donations above £500 come from a permissible source.

In most cases, this means the donor must be an individual registered on a UK electoral roll, a UK-registered company carrying out business in the UK, a UK trade union, or another permitted UK organisation such as a building society or limited liability partnership.

Political parties are required to take reasonable steps to verify the identity of donors and confirm that they meet these criteria.

If a party cannot confirm that a donor is permissible, the donation must be refused or returned.

Donations above reporting thresholds must also be disclosed to the Electoral Commission, which publishes them publicly. This means large political donations are already visible to regulators, journalists and the public.

Importantly, the legal framework does not depend on how a donation is made. Donations can take the form of bank transfers, shares, property or other assets.

The core safeguard is verifying the identity and permissibility of the donor rather than restricting the specific financial rails used to transfer funds.

How Risks Are Managed Within the Financial System

Concerns about illicit finance and foreign interference are not unique to cryptocurrency. They apply across the entire financial system.

The UK’s political finance regime therefore operates alongside the wider regulatory framework governing financial services.

Banks and financial intermediaries must comply with anti-money laundering and sanctions regulations. They are required to verify customer identities, monitor transactions and report suspicious activity.

These systems are designed to identify potential illicit finance before funds ever reach political parties.

Political parties themselves then apply a second layer of oversight, verifying that donors are permissible under electoral law and reporting donations where required.

In practice, this creates multiple layers of protection designed to ensure transparency and accountability in political funding.

Where Crypto Donations Fit Into the Existing Framework

Crypto donations are not outside this system.

Guidance from the Electoral Commission makes clear that donations made in cryptoassets must comply with the same permissibility checks and reporting requirements as any other donation.

Political parties receiving crypto donations must still verify the identity of the donor, confirm that they are a permissible source and record the value of the donation at the time it is received.

If the donor cannot be identified or is not permissible under UK law, the donation must be refused or returned.

Like other assets such as shares or property, cryptocurrencies represent a form of transferable value. As a result, they fall within the scope of existing political donation rules rather than existing outside them.

Transparency and Traceability in Blockchain Transactions

Where crypto differs from some traditional payment methods is the transparency of blockchain transactions.

Transactions recorded on public blockchains create a permanent and traceable ledger. Investigators can follow the movement of funds across addresses and, in many cases, across jurisdictions.

Law enforcement agencies increasingly rely on blockchain analytics tools to investigate illicit financial flows and identify bad actors.

Tools such as mixers can obscure transaction histories, but they represent a relatively small share of overall activity and are widely monitored by blockchain analytics providers.

In some cases, the transparency of blockchain transactions may actually make crypto donations easier to trace than certain traditional forms of financial activity.

A Policy Review Now Underway

These questions are now being examined as part of a formal policy process.

Earlier this year, the Government commissioned an independent review into foreign financial interference in UK politics, led by Philip Rycroft. The review is examining whether existing political finance laws remain fit for purpose in an increasingly digital financial environment, including how emerging technologies such as cryptoassets interact with the safeguards governing political donations.

The review was commissioned by the Secretary of State responsible for electoral law, Steve Reed, following growing concern that hostile actors could attempt to exploit weaknesses in democratic institutions. Independent reviews of this kind often play an important role in informing legislative reforms and regulatory guidance.

The conclusions of the Rycroft review are expected later this month and may influence the Government’s approach to reforms in elections legislation currently progressing through Parliament.

For the digital assets sector, this review represents an important opportunity to ensure that policy decisions are informed by a clear understanding of how the technology operates in practice. As part of this process, we have been engaging directly with policymakers involved in the review. We wrote to the Secretary of State outlining the sector’s perspective and also met with Philip Rycroft as part of the review process.

Constructive engagement of this kind is essential to ensuring that the policy debate reflects the operational realities of both the technology and the regulatory framework that already governs it.

What a Proportionate Approach to Crypto Donations Could Look Like

Ensuring that political donations are transparent and protected from foreign interference is essential.

However, policy responses should remain proportionate and grounded in evidence.

In its letter to the Secretary of State, CryptoUK outlined several practical safeguards that could strengthen oversight while allowing legitimate donations to continue.

These include ensuring that donations are processed through FCA-registered crypto exchanges, maintaining strong donor identity verification requirements, and converting donations into sterling within a defined timeframe.

Additional guidance could also help political parties manage compliance when receiving digital asset donations.

Another potential transparency measure would be for political parties to publish the wallet addresses used to receive crypto donations, allowing the public to view donation flows directly on blockchain explorers.

Such measures would strengthen oversight while ensuring that policy remains aligned with the UK’s broader ambition to support innovation in digital finance.

Would Banning Crypto Donations Actually Reduce the Risks?

The Rycroft review is expected to report later this month and could play an important role in shaping the next phase of the UK’s political finance framework.

Ensuring that political donations are transparent and free from foreign interference is essential to maintaining trust in democratic institutions.

But the key question remains the one at the centre of the current debate: would banning crypto donations meaningfully reduce those risks?

The evidence suggests that the safeguards that matter most are not tied to the payment technology itself. They lie in verifying the identity of donors, ensuring that donations come from permissible sources, and maintaining transparency around the movement of funds.

Those safeguards already exist — and they apply regardless of whether a donation is made via bank transfer, shares, property or digital assets.

As the UK considers the way forward, the focus should remain on strengthening those systems of verification and oversight rather than singling out a specific form of financial technology.

If the UK is serious about its ambition to become a global leader in digital assets, the debate around crypto donations should be guided by evidence, proportionality and a clear understanding of how the technology — and the existing regulatory framework — actually works.

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The UK’s Payments Overhaul: Laying the Foundations for 2030

Jonathan Marriott — Mon, 02 Mar 2026 18:20:07 +0000

On 26 February 2026, the Payments Vision Delivery Committee published the Payments Forward Plan, setting out a clear and coordinated regulatory roadmap for the payments sector over the next three years. Developed jointly by HM Treasury, the Bank of England, the Financial Conduct Authority, and the Payment Systems Regulator, the plan builds on the strategic direction established by the government’s National Payments Vision.

While presented as a three-year roadmap, the Payments Forward Plan is not simply about incremental reform. It reflects a more ambitious attempt to rebuild the foundations that underpin how money moves, how trust is maintained, and how innovation is safely introduced into the financial system. Set against the National Payments Vision, the plan provides the clearest view yet of what that rebuild is intended to achieve, laying out a coordinated regulatory and infrastructure pathway across retail payments, wholesale markets, and digital assets.

From regulatory congestion to regulatory sequencing

One of the strongest signals in the plan is a recognition that the existing regulatory landscape has become congested. Overlapping responsibilities, multiple concurrent reforms and fragmented accountability have all contributed to uncertainty for firms and slower delivery of outcomes.

The proposed consolidation of the Payment Systems Regulator into the Financial Conduct Authority is therefore more than an institutional reshuffle. It is intended to create a more streamlined, predictable regulatory environment, reduce duplication and give firms clearer lines of engagement. Alongside this, the review and modernisation of payments and e-money legislation aims to replace inherited EU frameworks with a more agile, UK-specific regime that can evolve alongside technology.

Importantly, this work is not limited to technical tidying-up. The reform agenda explicitly considers how regulation should support tokenised payments, including stablecoins and tokenised deposits, how Strong Customer Authentication should evolve, how agentic AI-enabled payments might be accommodated, and how regulation can better support financial inclusion. The goal is not deregulation, but fit-for-purpose rules that can withstand rapid change.

Rebuilding the infrastructure of everyday payments

At the infrastructure level, the plan points towards a generational shift. A next-generation retail payments architecture is being designed to replace systems that were never intended to support real-time, data-rich and programmable payments at scale.

In the near term, this is complemented by targeted enhancements to Faster Payments and Bacs to improve resilience and better support account-to-account innovation. Over time, it extends into longer RTGS and CHAPS settlement hours, synchronisation experiments that allow assets and payments to move together, and wholesale trials to test whether existing systems can meet emerging market needs.

The Digital Securities Sandbox plays a particularly important role here. By enabling tokenised payments to be tested in live-like conditions, it allows regulators and industry to explore distributed ledger technology in a controlled environment, rather than relying on theory or offshore experimentation.

Digital assets move into the core conversation

Perhaps the most notable shift in tone is how digital assets are treated. Stablecoins, tokenised deposits and potential wholesale central bank money are no longer framed as peripheral innovations. They are considered alongside mainstream payment infrastructure, regulatory reform and financial stability objectives.

The digital pound remains in its design phase, but its positioning is telling. It is framed as potential public infrastructure, assessed on its systemic role rather than as a consumer product. This reflects a broader approach that views money, payments and settlement as shared utilities rather than isolated services.

Data, trust and inclusion as system design choices

Beyond rails and regulation, the plan places significant emphasis on trust. Sustainable Open Banking, interoperability with future Open Finance schemes, improved data sharing, fraud prevention, digital identity and a more proportionate AML regime are all treated as integral components of the payments ecosystem.

These are not bolt-ons. They shape who can participate, how risk is managed and whether innovation benefits consumers and businesses rather than undermining confidence. The same applies to work on safeguarding, consumer protection and access to cash, which recognises that inclusion and resilience remain essential even as payments become increasingly digital.

Speed versus system integrity

It is fair to acknowledge the growing frustration across industry that regulators are not moving quickly enough. In some areas, that criticism is justified. The pace of innovation in payments, digital assets and data-enabled finance is relentless, and delays do carry real economic and competitive costs.

However, reading the Payments Forward Plan in full makes clear the scale of what is being attempted. This is a multi-disciplinary transformation spanning law, supervision, infrastructure, competition policy, consumer protection, data governance and financial stability. Much of the work must be carefully sequenced, coordinated across multiple authorities and delivered without compromising trust in the system.

That does not mean progress should be slow. It does mean it has to be done right. What the plan ultimately signals is a shift away from reactive rule-making towards deliberate infrastructure-building. If delivered well, that approach may prove more valuable than speed alone.

If you would like to explore the entire plan, it is available to download here.

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CryptoUK Response to FCA Consultation Paper CP25/42: A prudential regime for cryptoasset firms

Jonathan Marriott — Fri, 13 Feb 2026 09:30:54 +0000

On 16 December 2025, the Financial Conduct Authority (FCA) published a coordinated package of three crypto consultation papers, setting out the next phase of the UK’s digital asset regulatory framework. With our earlier responses now published, we are pleased to share the third and final of our three submissions. This response addresses CP25/42: A prudential regime for cryptoasset firms, which sets out proposed capital and prudential requirements for firms undertaking a broad range of regulated cryptoasset activities.

The consultation builds on CP25/15 and extends the proposed prudential regime beyond stablecoin issuance and safeguarding to include firms operating qualifying cryptoasset trading platforms, providing staking services, undertaking intermediation, and offering cryptoasset lending and borrowing. These proposals will play a central role in shaping how both crypto-native and traditional firms structure and capitalise their UK operations under the future regulatory regime.

In our response, members stress that appropriately calibrating the UK’s prudential regime is essential to supporting consumer protection while maintaining international competitiveness. Regulatory certainty is a necessary foundation, but a regime that disproportionately burdens UK-based firms risks pushing cryptoasset activity offshore. We also highlight concerns that widely traded overseas stablecoins are not treated as equivalent to UK qualifying stablecoins, despite their central role in global crypto markets.

Members note that while CP25/42 addresses elements that were missing from CP25/15, engaging with the prudential framework in stages has limited the industry’s ability to assess the regime as a whole. While we appreciate the constraints involved, firms would ideally have had the opportunity to consider the full framework in the round, particularly given the interdependencies across different parts of the regime.

The response also raises concerns about the absence of a transitional period for firms to meet new capital requirements. Crypto-native firms that have not previously been subject to regulatory capital rules may be placed at a competitive disadvantage, and all firms may be required to undertake complex and time-consuming capital restructuring simultaneously, potentially under significant market pressure.

We further highlight potential unintended consequences arising from the proposed expansion of “CRYPTOPRU activities”. In particular, traditional finance firms undertaking limited safeguarding activities in relation to tokenised traditional assets could be captured by CRYPTOPRU requirements, even where they are already subject to MIFIDPRU and where the relevant assets are already reflected in existing capital calculations. In such cases, the outcome risks being duplicative and disproportionate.

Finally, members express concerns about the calibration of the Category A cryptoasset conditions and the application of volatility adjustments that do not adequately reflect the risk profile of stablecoins. UK-centric assumptions fail to reflect the realities of crypto markets, where US-denominated stablecoins remain foundational. As a result, the proposals risk discouraging firms and liquidity providers from operating in UK crypto markets or booking risk to UK entities, potentially undermining wider government and regulatory objectives around innovation and growth.

This response completes CryptoUK’s engagement with the FCA’s current consultation package and reflects our continued focus on ensuring the UK’s crypto prudential regime is proportionate, workable, and internationally competitive.

Download the full response

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CryptoUK Response to FCA Consultation Paper CP25/41: Regulating cryptoassets: Admissions & disclosures and market abuse regime for cryptoassets

Jonathan Marriott — Thu, 12 Feb 2026 11:25:13 +0000

On 16 December 2025, the Financial Conduct Authority (FCA) published a coordinated package of three crypto consultation papers, setting out the next phase of the UK’s digital asset regulatory framework. Following the publication of our first response earlier this week, today we are pleased to share the second of our three responses. This response covers CP25/41: Admissions & Disclosures and the Market Abuse Regime for Cryptoassets, which focuses on how cryptoassets should be admitted to trading, the disclosures firms must make, and the rules designed to prevent unlawful disclosure, insider dealing, and market manipulation. Together, these measures aim to underpin fair, orderly, and transparent UK crypto markets.

In our response, CryptoUK welcomes the proposal to introduce transitional arrangements for disclosure requirements covering cryptoassets already in circulation. A clearly defined transitional period is critical to effective compliance and should apply consistently to both Cryptoasset Trading Platforms (CATPs) and persons applying for admission. Introducing disclosure obligations for CATPs ahead of issuers risks regulatory uncertainty, inconsistent or incomplete disclosures, and additional costs — challenges already observed during the implementation of MiCA.

We also highlight the importance of clarity around the reusability of admission documents. Where a cryptoasset has previously been admitted to trading and documentation has already been filed by an issuer or CATP, other market participants should be able to rely on that documentation, provided the information can be verified and updated where necessary. This approach would reduce duplication, lower costs, and more closely align the UK regime with existing MiCA exemptions.

Finally, our response calls for explicit guidance on the treatment of legacy listings. The industry requires certainty on whether cryptoassets already admitted to trading would be required to relist under the new regime, as has been the case in other jurisdictions.

This second consultation represents another important building block in the UK’s evolving crypto regulatory framework. We look forward to continuing constructive engagement with the FCA as the remaining elements of the regime are developed and finalised.

Download the full response

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CryptoUK Response to FCA Consultation Paper CP25/40 Regulating Cryptoasset Activities

Jonathan Marriott — Wed, 11 Feb 2026 14:32:02 +0000

On 16 December 2025, the Financial Conduct Authority (FCA) published a coordinated package of three crypto consultation papers, setting out the next phase of the UK’s digital asset regulatory framework. CP25/40 “Regulating cryptoasset activities” focuses on bringing core cryptoasset activities into the UK regulatory perimeter, including trading platforms, intermediation, lending and borrowing, custody, and related conduct standards. It forms a central part of the proposed framework for how crypto firms will be authorised, supervised and held to conduct expectations comparable to traditional financial services.

Key highlights from our response:

We recognise that international harmonisation is a priority for the FCA. We support alignment with international standards, while maintaining scope for divergence where appropriate. In our view, an equivalence-based approach would be the most effective way to support cross-border activity and reinforce the UK’s competitiveness. We urge the FCA to commence this process as soon as possible.

We also highlighted the need for greater clarity in terminology. The Consultation Paper alternates between “consumer” and “retail client”. While “consumer” is a statutory term, the distinction between consumer, retail and professional client categories should be clearly articulated. Ambiguity creates uncertainty around disclosure, suitability and conduct obligations, particularly for firms operating across jurisdictions. Updated guidance clarifying whether professional clients may fall within the definition of consumers would be helpful.

In addition, we identified areas requiring further clarification. The paper does not confirm whether offering loans to retail clients in the form of cryptoassets constitutes consumer credit lending. While lending and borrowing activities are addressed in part, the application of the consumer credit regime remains a recognised grey area under existing regulation and would benefit from explicit guidance.

We also asked how tokenised peer-to-peer loans fit within the proposed legislative framework, given that they are neither specified investment cryptoassets nor “transferable” under the definition of qualifying cryptoassets. Clarification here would help define the regulatory perimeter with greater certainty.

Download the full response

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CryptoUK response to the Bank of England’s proposed regulatory regime for sterling-denominated systemic stablecoins

Jonathan Marriott — Tue, 10 Feb 2026 12:47:23 +0000

On 10th November, the Bank of England (BoE) published a consultation paper setting out its proposed regulatory regime for sterling-denominated systemic stablecoins. This paper is aimed at preparing for a future where new forms of digital money may be widely used for payments alongside existing ones, offering valuable choice for the public.

Key highlights from our response:

We welcome the BoE’s proposal to allow systemic stablecoin issuers to receive a return on a proportion of their backing assets through holding up to 60% of backing assets in short-term sterling-denominated UK government debt. We nonetheless have some concerns that the requirement for at least 40% of backing assets to be held in the form of central bank deposits at the BoE may place the UK (and sterling-denominated stablecoins) in an uncompetitive position on the global stage given the approach taken by other markets.

We broadly welcome the BoE’s proposed step-up regime, which recognises that issuers that are systemic at launch need different treatment. That said, we do have some concerns about the appropriateness of this regime, particularly for early stage and smaller stablecoin models recognised as systemic at launch – our members suggest that aligning more closely to the Financial Conduct Authority (FCA) regime would lower barriers to entry and allow the UK market to be competitive to new entrants.

We would highly recommend that the BoE reviews and understand the requirements in other jurisdictions and ensure that the UK is favourably positioned in a global stablecoin marketplace. The impact on issuers of the BoE regime should be considered – where too many onerous requirements are imposed, the business case for establishing sterling-denominated stablecoins in the UK may be undermined. Ensuring the competitiveness of the UK as a stablecoin market must be a core design principle.

We think the greatest impact on the usability of stablecoins will arise in the presence of holding limits for businesses. Every retail business will likely need to seek an exemption to hold stablecoin amounts in excess of prescribed holding limits, as well as any stablecoin trading business.

The BoE’s concerns around potential reductions in commercial bank deposit funding should be considered in light of how other major jurisdictions have approached reserve structuring. Under MiCA, euro-denominated stablecoin issuers are required to hold deposits with authorised commercial banks and in high-quality liquid assets, rather than directly with the European Central Bank (ECB).

We agree with the BoE’s view that there are complexities around public permissionless blockchain ledgers. We also recognise that their continued use in the stablecoin market is contingent on ledgers meeting certain expectations around accountability, settlement finality and operational resilience. However, we think it is important for the BoE to recognise that the technology and infrastructure behind the ledgers is mature and the actual associated risks are often overstated. To appropriately calibrate the regulatory approach, a more proportionate and technologically neutral view of the ledgers should be considered.

Download the full response

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Hosted a delegation of senior US crypto and digital asset industry leaders from The Digital Chamber at the UK Parliament

Jonathan Marriott — Wed, 04 Feb 2026 20:00:39 +0000

On 4 February 2026, the Crypto and Digital Assets All-Party Parliamentary Group (APPG), co-chaired by Lord Vaizey and Gurinder Singh Josan MP, and supported by CryptoUK as secretariat, hosted a delegation of senior US crypto and digital asset industry leaders from The Digital Chamber at the UK Parliament.

The roundtable brought together UK parliamentarians alongside senior representatives from the US and UK digital assets industry for a wide-ranging and constructive discussion on the US approach to crypto and digital assets, recent regulatory developments in both jurisdictions, and opportunities to strengthen UK–US collaboration in this fast-moving sector.

Discussions focused on how the UK and US can work together to support a strong, competitive and globally connected digital assets ecosystem that delivers robust consumer protection and market integrity, while also encouraging innovation, investment and long-term growth. Participants explored how different jurisdictions are approaching regulation, the role of financial regulators, and how policy frameworks can be designed to support responsible adoption of new technologies.

The roundtable also examined what is needed to attract and retain investment in the sector, including the importance of regulatory clarity, proportionate licensing and supervision, and effective engagement between regulators and industry. Participants also discussed some of the practical barriers facing firms operating across borders, including access to banking services, and how greater alignment and dialogue could help address these challenges.

The discussion highlighted the significant opportunities that a well-regulated digital assets sector presents not only for financial services, but for the wider economy – supporting innovation, competitiveness and the UK’s ambition to remain a leading global financial centre.

UK and US participants agreed on the value of continued dialogue and committed to maintaining an ongoing conversation to explore how the two jurisdictions can continue to work together, share best practice, and deepen cooperation on digital assets policy and regulation.

The Crypto and Digital Assets APPG is a leading cross-party forum in Westminster, bringing together parliamentarians, industry leaders and subject-matter experts to support informed discussion and the development of balanced, workable policy for the UK’s digital assets sector.

Download the official minutes of the APPG meeting here.

To find out more about the APPG or to get involved, please get in touch via the contact form on the APPG page.

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First crypto industry roundtable of 2026 in UK Parliament

Jonathan Marriott — Mon, 26 Jan 2026 18:00:14 +0000

On 26 January 2026, the Crypto and Digital Assets APPG, co-chaired by Lord Ed Vaizey and Gurinder Singh Josan CBE MP, hosted its first crypto industry roundtable of the year in UK Parliament.

Chaired by Lord Vaizey, the session brought together senior industry voices including Yasmin Kaur Johal (CMS UK), Ian Taylor (CryptoUK) and Dean Sovolos (B2C2) to explore the UK’s proposed crypto regulatory regime, identify potential gaps and barriers to investment, and assess how the UK compares internationally.

The discussion covered:

The UK’s forthcoming crypto regulatory framework
International developments, including UK–US regulatory cooperation
Growth and investment, consumer protection, and tackling economic crime

There was a strong focus on the role of regulators and the role of the Financial Conduct Authority, the pace of regulation, and the importance of providing certainty for businesses and investors. Participants also highlighted the need to ensure regulators are properly resourced and equipped ahead of the new regime coming into force.

Comparisons with the US, UAE and Europe featured heavily, with a clear view that the US is currently moving faster and attracting increased investment as a result. The message from industry was clear: the UK must continue to move at pace to remain competitive, while ensuring meaningful industry engagement so the final regime is workable and fit for purpose.

The APPG remains the leading forum in Westminster for parliamentary–industry dialogue on crypto and digital assets, and will continue to host further sessions throughout the year.

Download the official minutes of the APPG meeting here.

To find out more about the APPG or to get involved, please get in touch via the contact form on the APPG page.

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Banning Crypto Donations Won’t Solve the UK’s Foreign Influence Problem

Jonathan Marriott — Wed, 14 Jan 2026 18:24:36 +0000

Foreign interference is a real and growing national security concern. In practice, however, the most scalable and effective forms of foreign influence in modern democracies are exercised through information systems — online platforms, social media, and digital amplification — rather than through direct political funding. The question, then, is whether banning crypto political donations addresses that risk, or distracts from where political influence is most effectively exercised today.

The current push in the UK to ban or restrict political donations made in crypto is being driven by clear concerns from senior Labour MPs. Committee chairs have warned that crypto donations could be exploited by hostile states, that the true source of funds may be difficult to verify, and that emerging technologies such as AI could further obscure attempts to interfere in democratic processes. Their argument is that an outright ban would close off a potential route for foreign influence and strengthen national security protections ahead of future elections.

Those concerns should not be dismissed. In a global environment marked by geopolitical tension, contested elections, and heightened awareness of foreign interference, safeguarding democratic independence has become a core national security priority. Political funding is an obvious pressure point, and policymakers are right to scrutinise any system that appears to weaken existing controls.

However, focusing narrowly on crypto risks mistaking the visibility of a new technology for the scale of the underlying threat. While financial flows matter, they are only one — and arguably not the most influential — channel through which foreign actors seek to shape political outcomes. The real question is not whether crypto is legitimate, but whether policy responses are aligned with how political influence actually operates in a digital world.

How Political Donations Are Designed to Work — and Why Crypto Challenges That Design

UK political donations currently flow through a narrow set of rails: bank transfers, cheques, regulated payment services, and tightly constrained forms of cash. These rails are not accidental. They embed identity checks, jurisdictional anchors, and friction by design.

Banks and payment providers are subject to customer due diligence, sanctions screening, and suspicious activity reporting. Aggregation rules require donors to be identified once thresholds are crossed, and the Electoral Commission has enforcement powers to investigate breaches.

Cash is limited precisely because it is harder to attribute at scale. Physical presence, repetition, and local coordination impose natural constraints. The system is imperfect, but its underlying logic is clear: political finance prioritises enforceability over convenience.

Crypto challenges several assumptions on which this system depends. It allows value to move quickly, remotely, and across borders without relying on traditional intermediaries. Identity is not native to the protocol layer, and jurisdiction can be difficult to establish.

This does not make crypto inherently malicious. But it does mean that existing political finance controls are not naturally aligned with how crypto functions. From a national security perspective, the concern is whether funds originating outside the UK could plausibly enter domestic politics in ways that are difficult to detect or challenge — even as far larger influence operations already operate through digital media at scale.

How AML Frameworks Address Crypto Risk — and Why Political Finance Struggles to Rely on Them

Many of the risks cited in the debate around crypto political donations — transaction layering, value fragmentation, intermediary use, and origin obfuscation — are not new risks. They are classic money-laundering typologies and are already addressed within existing anti-money laundering and counter-terrorist financing frameworks.

International standards set by the Financial Action Task Force (FATF) explicitly recognise these behaviours as AML risks in virtual asset systems and require regulated intermediaries to monitor, mitigate, and report them. The unresolved issue is not whether these risks are known or regulated. It is whether political finance frameworks are equipped — or willing — to rely on AML infrastructure designed for financial institutions.

This matters because financial rails are only one component of foreign interference strategies, while information operations, narrative manipulation, and digital amplification remain far harder to attribute, regulate, or contain.

AML regimes are built to manage potential risk over time, allowing for monitoring, escalation, and investigation after transactions occur. Political finance law operates differently. It demands certainty at the point a donation is accepted, places the compliance burden on political parties rather than regulated institutions, and offers little tolerance for ambiguity once funds enter the political system.

This mismatch helps explain why policymakers gravitate toward bans. It is not that AML controls do not exist, but that integrating political finance with AML complexity is institutionally uncomfortable and politically risky. Banning the rail avoids that integration entirely.

The result is a policy inconsistency. If obfuscation and layering are genuinely national security threats, excluding crypto donations does not remove the risk — it sidesteps the harder question of how political finance should interface with the financial crime controls already in place, and even then only addresses part of the problem.

Provenance, Control, and the Limits of Certainty

One issue left largely implicit in the debate is the assumption that crypto donations require proof of absolute provenance — that political parties must be able to demonstrate that a digital asset has never passed through a foreign or sanctioned actor at any point in its lifecycle. In practice, this is an unworkable standard.

Crypto assets are fungible. Like cash or bank deposits, they circulate through global systems, exchanges, and intermediaries. The fact that a token may once have passed through a foreign wallet does not, on its own, imply foreign control, intent, or interference at the point of donation. Applying a lifetime purity test to crypto would impose a higher evidentiary bar than exists for any other form of political funding — one that neither traditional finance nor cash donations can meet.

Political finance has historically relied on reasonable assurance about the donor, not mathematical certainty about the history of every unit of money. The relevant questions are who controls the funds, whether the donor is permissible under UK law, and whether the donation is being made on behalf of another party. Shifting the debate from asset purity to identity, control, and intent would align crypto donations more closely with the principles that already underpin political funding rules.

Rather than banning crypto outright, a more constructive approach would focus on anchoring identity at the point of donation — for example through verified or KYC-linked wallets — while recognising the inherent limits of provenance in any fungible financial system.

Why Focusing on Crypto Donations Misses the Broader Influence Challenge Facing Modern Democracies

The real challenge for policymakers is not eliminating risk, but building resilience. That means focusing on outcomes rather than technologies: attribution, aggregation, accountability, and enforcement across all meaningful channels of influence — particularly those operating through digital communication and online platforms at scale.

Blanket bans may reduce short-term political risk, but they also carry costs. They risk signalling that new financial infrastructure is incompatible with democratic systems rather than something those systems can adapt to and govern. They also risk substituting clarity of action for effectiveness of outcome.

When confronted with comparable risks arising from digital platforms and online communication infrastructure, the UK did not resort to prohibition. Instead, it developed proportionate legislative responses focused on transparency, accountability, platform responsibility, and enforcement — including clearer rules around online political advertising, platform obligations, and regulatory oversight — accepting that foundational systems carry risk, but can be governed rather than excluded.

Crypto does not pose a unique threat to democracy. Treating it as an exceptional case risks reinforcing a deeper problem — policy that reacts to novelty rather than evidence. In a political environment already shaped far more profoundly by online information flows than by donation mechanisms, focusing regulatory energy on crypto risks mistaking a visible edge case for the core challenge.

In a moment of global political unrest, democratic resilience will come not from freezing systems in time, but from modernising them with clear-eyed realism — governing new infrastructure alongside the digital platforms that already shape political life.

What a More Resilient Approach Could Look Like

Rather than banning crypto donations outright, a more effective response would focus on strengthening the systems around political finance — reducing risk without demanding certainty from political parties themselves. Political parties are not designed to act as financial crime investigators, and the existing framework already relies, by design, on regulated intermediaries to perform identity checks, sanctions screening, and transaction monitoring before funds enter the political system. This is not a new model: it is exactly how traditional donations are managed today, with risk filtered upstream through regulated banks and payment providers rather than assessed by parties in isolation.

There is already significant scope for closer collaboration with the private sector. Many of the analytical tools required to assess crypto-related risk — including blockchain monitoring, network analysis, and anomaly detection — are already in active use across regulated financial services. Drawing on these capabilities through supervised, transparent partnerships would allow public authorities to strengthen safeguards using technologies they already rely on for anti-money laundering and sanctions enforcement, rather than defaulting to prohibition.

From a technical perspective, the implication is straightforward. Identity and control should be anchored at the point of donation, rather than attempting to retroactively establish the full transactional history of a fungible asset. Mechanisms such as verified or KYC-linked wallets, transaction risk scoring, and proximity-based exposure analysis are well understood within AML frameworks and could be applied to political finance without reinventing the wheel. In practice, this would replicate the role that UK bank accounts and payment processors already play in the existing donations framework, rather than creating a parallel or experimental system. Requiring crypto donations — regardless of size — to pass through regulated, UK-based exchanges or verified wallets would further reduce ambiguity by effectively lowering the reporting threshold to zero while maintaining appropriate oversight upstream.

Equally important is institutional coordination — and this is not a novel requirement. In traditional finance, political parties already rely on an implicit allocation of responsibility between regulated intermediaries and the state. Banks and payment providers conduct due diligence and monitoring; government agencies receive intelligence and enforce breaches; and political parties operate on the basis that funds arriving via UK-regulated rails have already passed through those controls. This division of labour is a structural feature of the system, not a gap.

Crypto challenges this arrangement not by introducing a fundamentally different risk, but by exposing the absence of explicit rules governing how political finance should rely on regulated intermediaries outside the banking sector. Clarifying that interface — by formally recognising the role of regulated crypto intermediaries, strengthening information-sharing between agencies, and making reliance explicit — would reduce both compliance risk and political uncertainty, extending an existing coordination model to new financial rails rather than treating crypto as an exceptional case.

None of these approaches eliminates risk entirely. But neither does a ban. The difference is that they treat crypto as part of the same financial and digital ecosystem that political finance already depends on — one that can be governed, improved, and held accountable — rather than as a novel threat to be excluded.

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