- This initiative is part of a wider effort to regulate the crypto market more tightly and protect consumers from financial harm.
- The FCA cited a significant increase in credit-based crypto purchases, noting that 14% of users used borrowed funds in 2024.
Britain is preparing to ban retail investors from using borrowed money to trade cryptocurrencies. In a new proposal released by the Financial Conduct Authority (FCA) on Friday, the regulator aims to outlaw the use of credit cards and other forms of debt to purchase cryptocurrencies.
This move comes as part of a broader push to bring the volatile crypto market under tighter regulation and shield consumers from potentially devastating losses.
The FCA’s plan reflects growing concern over the risks faced by ordinary investors in an industry known for sudden losses and limited oversight. The regulator insists it is not anti-crypto but wants to build a safe and competitive framework.
A key proposal is to bar the use of credit cards or credit lines from e-money institutions for crypto purchases. The FCA argues that this measure is necessary to prevent unsustainable debt levels, especially if crypto prices plunge and investors struggle to repay what they borrowed. The FCA also highlighted a sharp rise in credit-based crypto purchases: 14% of users reportedly relied on borrowed funds in 2024, more than double the 6% figure from 2022.
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Lending, Staking, And The Risks Involved
Beyond outright purchases, the FCA also wants to rein in crypto asset lending and borrowing, activities that allow users to lend or borrow digital tokens for a yield or credit.
The regulator also flagged staking, a popular practice where users lock tokens into blockchain networks in exchange for rewards, as an area needing greater transparency.
These proposals follow the UK Treasury’s move to bring crypto under compulsory regulation. Exchanges, token issuers, and brokers will soon face the same rules as traditional financial players. The FCA said it plans to subject retail-facing crypto firms to stricter standards than those that cater only to professional investors.
Planned reforms would also prevent platforms from offering incentives for order flow, enforce clear separation between proprietary and client trades, and impose transparency in pricing and trade execution. The FCA has now opened a consultation period to gather feedback before finalizing the rules.
