by Jude Ayua

The UK’s Financial Conduct Authority (FCA) has proposed new regulations applicable to Crypto Asset Trading Platform (CATP): Admissions & Disclosures (A&D) and Market Abuse Regime for Crypto Assets (MARC). They aim to protect investors, maintain market integrity, improve market safety, and enhance transparency and security. The regulations will limit public offers of crypto assets to authorized crypto platforms. Following the publication of its Discussion Paper on the proposed regulations, the FCA issued a statement on 16 December 2024 calling for feedback from “Government, our international partners, industry and consumers to help us get the future rules right.” Deadline for receiving feedback is March 2025. 

The FCA has engaged with the industry to inform the development of its rules for the A&D and MARC regulations. In April and May 2024, the FCA held Crypto Policy Roundtables with market participants to get feedback on the regulations. The FCA noted that “Insights from these ongoing engagements will feed into the formal consultation process…once the government has laid the relevant statutory instruments.”

Read also: UK to pass stablecoin legislation as Trump promises to lessen digital assets regulation.

Admissions and Disclosure requirements for public-offering issuers and offerors

The proposed A&D regulation includes requirements for disclosures by issuers or offerors at the point of admission to trading on a CATP. It will help prevent, detect, and disrupt primary risks identified in the market including financial crime (fraud, scams and money laundering), inadequate information, market integrity issues. A&D regulation will cover the following: 

• Prohibition of public offers of a crypto asset, unless there is an exemption. Crypto asset offers qualifying for exemptions include offers made only to qualified investors. 
• Admitting a crypto asset to trading on a CATP. 
• Communicating an advertisement relating to a public offer of a crypto asset.
• Disclosing information relating to a public offer of crypto assets. Operators applying to register as CATP will be required to provide information about their projects including risks, governance, and environmental impacts like energy usage and emissions.

Read also: UK to Recognize Crypto as Personal Property.

MARC to check crypto asset market abuse

MARC is a framework and regulatory approach for preventing, detecting, and disrupting crypto asset market abuse. The FCA acknowledged the risks arising from market abuse in both traditional securities and crypto asset markets, such as information asymmetries and manipulation.

The proposed MARC will cover prohibition of insider dealing, unlawful disclosure of inside information, and market manipulation, including dissemination of false or misleading information.

Limiting public offers of crypto assets to authorized platforms in the proposed regulations will enhance market transparency and integrity, while the requirement of comprehensive disclosures will mitigate risks of fraud and financial crime. The inclusion of environmental and governance disclosures reflects the government’s commitment to a safer, more sustainable crypto industry.

Read also: UK Trader charged for operating illegal crypto ATM.

Need for stakeholder involvement in rule-making process

One commendable approach by the FCA is its deliberate involvement of the public, government, and industry experts in its policy formulation. FCA’s engagements with stakeholders to seek their opinions and contributions regarding the proposed regulations will ensure a favorable outcome. Since the regulations are to protect investors’ interests, they should be involved in the process directly.

Also, the three-month feedback window (December 2024 to March 2025) allows for comprehensive discussions and input from stakeholders. An extended consultation period reflects a more deliberate and participatory approach, which is essential for creating balanced policies in a complex and rapidly evolving sector like digital assets.

FCA’s stakeholder involvement approach provides a useful example for other jurisdictions making similar regulations. For example, the Nigerian Securities and Exchange Commission (SEC) recently proposed an amendment to Rules on Digital Assets providing a two-week timeframe for feedback. But the Nigerian SEC’s shorter feedback period may limit in-depth and diverse stakeholder contributions, and potentially compromise the quality of the policy formulation process. Besides, while requesting feedback, the Nigerian SEC still proceeded with stating the commencement date for the proposed amendments, seeming to suggest that the feedback sought is only procedural, not substantive. While the Nigerian SEC under its new leadership has made commendable efforts with stakeholder engagements, there is still room for improved stakeholder engagement here. This will boost the trust and confidence of operators in their regulators, stimulating active participation and improving regulatory compliance. 

Read also: Nigerian SEC raises the bar for VASPs in proposed amendment

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Jude Ayua is a policy analyst at CAB. A lawyer, Jude is an associate at Infusion Lawyers where he is a member of the Blockchain & Virtual Assets Group. He is also a member of the Policy & Regulations Committee of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN). Jude reports and writes on crypto policy and regulations. jude@infusionlawyers.com

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