Yeliz Akmaca 
The United Kingdom is taking action to prevent the high risks associated with debt-funded investments. As the crypto market draws attention with value surges accelerated by Trump’s election, this decision aims to protect investors. Foreign sources emphasize that the FCA is taking this step to strengthen financial stability.
“We are concerned that consumers purchasing crypto assets through credit could fall into unsustainable debt, especially if the value of crypto assets drops and they rely on that value for repayment.”</>
FCA Ban Strategy and Reasons
The FCA states that crypto purchases with credit could lead consumers into unsustainable debt. Sudden fluctuations in the value of crypto assets can expose investors to significant losses. Authorities continuously warn consumers that crypto investments are high-risk and carry the potential for total loss.
“We are considering several restrictions, including limiting the use of credit cards to directly purchase crypto assets and using credit limits provided by an e-money firm,” it says.
This supports the goal of curbing risky investments.
The FCA noted that 14% of crypto investors used credit to purchase crypto last year, up from 6% in 2022. However, the FCA indicated it is considering exempting certain stablecoins from the proposed restrictions. This imposes transparency, consumer protection, and operational resilience standards on crypto firms, similar to those in traditional financial sectors. The Financial Conduct Authority aims to regulate the market with these rules. Reuters reports that the UK aims to collaborate with the U.S. on crypto regulations.
Hannah Meakin from the law firm Norton Rose Fulbright stated that the FCA is trying to balance innovation with appropriate oversight, saying.
“However, this is no easy task, and it remains to be seen whether they can strike the right balance.”
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