Independent financial advisers, investment firms, brokers, lenders and other regulated businesses are increasingly encountering cryptoassets whether through client portfolios, referral arrangements, funding structures or disputes involving digital assets.
While interest in cryptoassets continues to develop, uncertainty around regulation, compliance and legal risk remains a significant challenge for firms regulated by the FCA. It is therefore important that firms have a clear understanding of where crypto fits within the current legal framework to effectively manage both opportunity and risk.
Our financial services lawyers explore how firms can navigate crypto exposure while managing regulatory risk and compliance obligations.
Crypto exposure and the FCA’s regulatory perimeter
Regulated firms may find that clients hold cryptoassets alongside more traditional investments, or request information about crypto-linked opportunities. In turn, this means that many financial services businesses now face indirect exposure to cryptoassets.
Currently, cryptoassets lack a bespoke regulatory regime, and the FCA has limited oversight of cryptocurrency businesses.
However, this does not mean activities involving crypto sit entirely outside the FCA’s regulatory perimeter.
To determine whether a business is carrying on a regulated activity relating to a cryptoasset that requires authorisation under the Finance Services and Markets Act 2000 (FSMA), the same considerations apply as for any other activity.
For authorised firms, this creates a risk of inadvertently undertaking regulated activity, particularly where crypto-related services are provided alongside more familiar financial products (for example, through marketing, referrals, advisory discussions or portfolio exposure).
Further, the FCA may still take an interest if consumer harm is identified or if conduct falls below expected standards.
Cryptoassets are naturally volatile and complex, and there is often a lack of clarity around valuations, liquidity, and risk.
As a result, firms must ensure they have a clear understanding of what they can and cannot do, robust internal policies, and appropriate governance oversight when dealing with cryptoassets.
Financial promotions and compliance risk
One of the most significant risk areas for cryptoassets is financial promotions.
The FCA's financial promotion regime applies to "qualifying cryptoassets" (including Bitcoin).
Issuing a financial promotion in breach of section 21 of FSMA is a criminal offence.
It is therefore vital that firms marketing products and services relating to qualifying cryptoassets conform with the financial promotion prohibition outlined under FSMA and have a clear understanding of how financial promotion rules apply to their marketing materials.
For financial services businesses, this means exercising caution when partnering with crypto businesses, referring clients, or allowing crypto‑related marketing to pass through their platforms.
Poorly structured arrangements can result in regulatory enforcement, reputational damage and significant remediation costs.
The FCA’s new regulatory regime for cryptoasset regulation
The FCA are currently developing an approach to improve regulation of cryptoassets with the dual purpose of mitigating risks associated with cryptoassets whilst supporting potentially beneficial technology.
On 4 February 2026, Parliament made The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 which will bring certain cryptoasset activities formally within the scope of FSMA.
This provides the FCA with greater power to regulate cryptoasset activities in a manner similar to traditional financial services, rather than relying on piecemeal rules such as the financial promotions regime.
The FCA have announced that the regime is due to come into force on 25 October 2027.
It is expected that, over the coming months, the FCA will publish further guidance and commentary on the new regime.
Governance and senior management accountability
For FCA-authorised firms, crypto risk is also a governance issue. Senior managers are expected to identify, assess and manage emerging risks within their business. Failure to do so can lead to regulatory scrutiny.
Boards and senior leadership teams should therefore ensure crypto-related activity is appropriately evaluated, detailed and supervised. This includes understanding exposure across the business, setting risk appetite, and ensuring staff are sufficiently trained.
Contact Our Financial Services Team
Cryptoassets continue to evolve, and regulation is gradually catching up. Legal and compliance risk is therefore unlikely to diminish in the short term. For financial services firms, the challenge is to engage with crypto in a way that is commercially sensible, legally compliant and aligned with regulatory expectations.
We advise a wide range of financial services businesses on regulatory compliance, governance and transactions involving crypto-related risk.
Our specialist crypto team also provides clear, strategic advice on cryptocurrency disputes, fraud and digital asset recovery, helping clients act quickly and decisively if issues arise.
If you would like to discuss how crypto may affect your business, or require assistance with a crypto-related dispute, please get in touch.
0161 941 4000
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Kiera Goodwin
Solicitor
Kiera is a Solicitor in the Corporate team at Myerson and a member of the Financial Services and Manufacturing teams. Kiera has experience in a variety of corporate matters, including employee ownership trusts, share sales, share buybacks, employee share option schemes, company reorganisations, and other general corporate matters.
About Kiera Goodwin