UK regulators are taking steps to block investors from using borrowed money, like credit card debt, to buy crypto. The move is part of a broader effort to update how digital assets are monitored and to protect consumers as the market grows rapidly.
Digital currencies like Bitcoin have seen huge price swings in recent months, especially following U.S. President Donald Trump’s win. These surges have raised concerns about how people are getting involved in crypto investing, prompting the Financial Conduct Authority (FCA) to consider tighter oversight while also trying to support innovation in the sector.
Recent data from YouGov shows a sharp increase in the number of people using borrowed funds to buy crypto, rising from 6% in 2022 to 14% in 2024. The concern is that borrowing to invest in highly volatile assets could lead to serious financial losses, including the risk of losing homes or other personal property.
The FCA’s proposal to ban such borrowing is likely to face opposition from fintech startups that see crypto as a key growth area. At the same time, UK government ministers have introduced draft legislation that would extend financial rules to crypto businesses, moving the UK’s approach closer to that of the United States rather than Europe.
Chancellor Rachel Reeves recently discussed crypto regulation with Scott Bessent, the U.S. Treasury Secretary. Both agreed to continue their talks this summer. Bessent, a known supporter of crypto and an opponent of central bank-issued digital currencies, has downplayed fears that tech giants like Apple and Meta could dominate future digital currency markets. In a Senate hearing earlier this year, he stated that there’s no clear reason for the U.S. to adopt its own central digital currency.
Meanwhile, officials in the eurozone have voiced concerns that the U.S.’s loose stance on crypto could threaten their financial stability and control over monetary policy.
In the UK, the Labor-led government is under growing pressure to clamp down harder on retail crypto investments. In 2023, a cross-party group of MPs recommended treating personal crypto investing more like gambling to protect consumers.
Still, Reeves supports easing some financial rules to encourage business growth, a stance echoed by FCA chief Nikhil Rathi. He has suggested simplifying regulations in London’s financial district to boost innovation.
David Geale, FCA’s head of digital finance, noted that proper regulation can build public trust in the crypto space, helping it grow sustainably. He said the goal is to create clear rules that allow companies to develop safely while protecting consumers and maintaining market fairness.
New laws will give the FCA authority to supervise all crypto-related firms, from exchanges and intermediaries to borrowers and lenders operating in the digital asset space.
Entities like Strategy Inc. (NASDAQ: MSTR) that are increasingly focusing on investing in crypto are likely to keep an eye on the evolving laws governing this industry in order to identify changes in different jurisdictions that could impact their strategic plans.
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