The UK's FCA is seeking input from the crypto industry, proposing reforms to investment rules and strengthening risk management.

Odaily Planet Daily reports that the UK Financial Conduct Authority (FCA) has released discussion and consultation documents proposing several reforms aimed at "enhancing the UK's investment culture" and has formally sought feedback from the crypto industry. The FCA stated that it intends to "expand consumer investment access" while adjusting rules related to customer segmentation and conflicts of interest.

The FCA pointed out that poor investment performance on high digital engagement (DEP) applications was almost entirely due to crypto asset and CFD trading. The regulator emphasized that some users were making investments through "crypto asset proxy products" without limits, risk warnings, or suitability tests, posing significant potential risks.

In its consultation document, the FCA recommended adding the following guidance:

For clients whose primary investment history is concentrated in high-risk speculative assets or crypto assets, this should not be considered a basis for "having professional investment capabilities" unless they have sufficient evidence to meet the thresholds of professional investors, including the ability to bear potential losses.

The FCA stated that the reforms aim to simplify the regulatory framework, assigning clearer oversight responsibilities to agencies rather than relying on the "more casual testing" of the past. The regulator requires companies involved in crypto-asset advisory or sales to submit feedback by February or March of next year.

The UK has been progressively modernizing its cryptocurrency regulations in recent years, including formally recognizing digital assets as "property" in 2024, providing clearer legal grounds for cases involving theft and bankruptcy. Simultaneously, the government is also assessing whether to ban cryptocurrency donations to political parties. (Cointelegraph)