The UK is preparing to ban the use of credit cards for buying cryptocurrencies and restrict access to crypto lending, as part of sweeping reforms aimed at tightening oversight and consumer protection in the digital asset space.
New Regulatory Framework to Govern Crypto Transactions
Under proposals unveiled by the Financial Conduct Authority (FCA), consumers in the UK may soon be prohibited from using credit cards or credit lines to purchase cryptoassets. The move follows the finance ministry’s decision to bring crypto trading under formal regulation, applying existing financial rules to exchanges, dealers, and token issuers.
Mass Adoption Prompts Consumer Risk Warnings
Approximately 7 million UK adults—about 12% of the population—own cryptoassets, according to FCA data. Despite this growth, the regulator continues to caution that retail investors could lose all their funds. A 2023 survey found that 14% of crypto investors used credit to fund their purchases, more than double the 6% figure reported in 2022.
Borrowed Funds, Lending, and Staking Under Scrutiny
Beyond credit-based purchases, the FCA is reviewing restrictions on lending and borrowing in crypto markets. Proposed measures include creditworthiness checks and assessments of consumer knowledge. The regulator cited liquidity risks, weak borrower vetting, and a general lack of understanding among users as drivers of potential harm.
Meanwhile, the FCA is aiming to improve transparency around crypto staking, a process in which users lock tokens on a blockchain in exchange for rewards. Its survey showed that 27% of UK crypto holders had engaged in staking.
Balancing Innovation and Oversight Remains a Challenge
Institutional investors will remain unaffected by these retail-focused rules. Legal expert Hannah Meakin of Norton Rose Fulbright noted that the FCA is attempting to balance support for innovation with appropriate regulation, but warned that the effectiveness of this balance remains to be seen.
Will Stricter Rules Strengthen or Stifle Crypto in the UK?
With the UK moving to close regulatory gaps in crypto trading, borrowing, and staking, questions remain about whether these protections will foster responsible growth—or stifle retail market participation.
