The Financial Conduct Authority (FCA) has announced a set of wide-ranging rules designed to bring much-needed oversight to the rapidly growing, and often high-risk world of cryptocurrency. Among the most significant changes is a proposed ban on lending to retail investors for the purpose of buying digital assets.

This move is part of a coordinated effort between the UK government and regulators to tighten up the digital asset space and ensure better protection for consumers. With so many people having lost money to misleading promotions, unregulated platforms, or high-risk crypto lending schemes, these new rules could mark a turning point.

Here’s what the FCA is planning, why it matters, and what you can do if you’ve already suffered financial loss.

Why the New FCA Rules Matter

The UK government recently laid out its intention to bring crypto under a clearer legal and regulatory framework. In response, the FCA has introduced sweeping rules to align the sector with existing financial standards. A key focus: stopping ordinary consumers from exposure to extreme risks.

Crypto lending, where investors either borrow money to buy crypto or use crypto as collateral to secure loans, has been flagged as particularly dangerous. These arrangements can create the illusion of easy gains, but the volatility of digital assets means losses can mount quickly, especially when debt is involved.

The FCA’s concern is clear: small investors (often referred to as retail investors) often don’t have the knowledge, resources, or financial resilience to cope with these kinds of risks, and they deserve better protection.

What Are the FCA’s New Rules?

As part of this latest announcement, the FCA plans to:

• Ban lending to retail investors for crypto purchases
  This means individuals will no longer be able to borrow money from regulated firms, including via credit cards, to invest in crypto-assets. Data indicates that the use of credit for crypto purchases in the UK rose from 6% in 2022 to 14% in 2023. The goal is to prevent overleveraging and reduce the financial harm caused by price crashes or platform collapses.
• Restrict Access to Crypto Lending Platforms:
  The rules would also restrict retail investors accessing crypto lending platforms due to concerns over loss of assets and counterparty failures, similar to the high-profile collapse of Celsius Network in 2022.

• Strengthen oversight of digital asset promotions
  Crypto exchanges would be required to separate their proprietary trading activities from those of retail clients, ensure transparent pricing and execution, and refrain from paying intermediaries for order flow. Additionally, all crypto firms serving UK consumers must establish a UK-based legal entity and comply with domestic regulations.
• Bring crypto within the scope of financial regulation
  Over time, more crypto activities, from trading to custody, will be governed under existing financial services law, increasing accountability and consumer protection. Crucially, the FCA plans to mandate that staking service providers reimburse users for losses caused by third-party actions, enhancing consumer protection in these arrangements.

These rules are expected to be finalised and enforced in the coming months, forming part of the UK’s broader strategy to make the country a safer and more credible place for digital asset investment.

What Can You Do If You’ve Already Lost Money in Crypto?

If you’ve suffered financial loss through cryptocurrency investments, whether due to misleading advice, coercion, high-risk lending, or platform failure, you may still have options for redress.

While crypto itself is not yet fully regulated in the UK, many of the activities around it are, such as how products are marketed, the advice given, and how certain firms operate. That means if a regulated firm such as your bank, an investment platform, an unsecured lender, or regulated fund breached FCA guidelines, then you may could have the opportunity to make a complaint or a claim for financial redress or compensation.

Claim My Loss Can Help – No Win, No Fee

While you can absolutely pursue a claim yourself, we know that for many people, the process can feel confusing or time-consuming, especially if you lack the time or confidence to investigate what took place.

This is where specialist firms like Claim My Loss (a trading style of HT Legal Ltd) comes in. We can:

• Review your case and check whether you may have a valid claim
• Carry out detailed investigations on your behalf
• Handle the complaint and claims process on your behalf
• Deal directly with firms, the FOS, or FSCS and if necessary, escalate your compliant via the courts if required.

We work on a No Win, No Fee basis, so if your claim isn’t successful, you won’t pay us anything but will have peace of mind you explored all avenues.

If you believe you were misled, mis-sold, or encouraged into a risky crypto investment, you’re not alone, and you may not have to bear the loss.

Contact us today to find out how we can help.