CFA Institute and CFA UK respond to the FCA's proposed rules for cryptoasset trading platforms, intermediaries, staking, and DeFi — advocating structural conflict prohibitions, best execution without carve-outs, and phased retail access to higher-risk products.
Set out below are our high-level positions:
1. Trading platforms — We support UK legal entity requirements for retail-serving CATPs, non-discretionary execution, and QCDD gating for retail access. We recommend clarification on cross-border insolvency treatment and substantive UK presence thresholds.
2. Conflicts of interest — We do not support permitting principal dealing within the same legal entity as a CATP operator. The conflicts — informational asymmetry, impaired surveillance neutrality, distorted price formation — are structural, not behavioural. We recommend an initial prohibition, with a thematic review once the MAR regime and supervisory capabilities have matured.
3. Intermediaries — We support best execution without carve-outs, the "three sources" pricing guidance, all-in cost transparency, a broad PFOF prohibition, and functional separation between proprietary trading and client execution — with legal separation where functional measures demonstrably fail.
4. Lending, borrowing, and staking — We do not support retail access to cryptoasset lending and borrowing at this stage. Disclosure and consent do not sufficiently mitigate structural risks, including insufficiently mapped stress transmission dynamics. We recommend restricting to professional clients, with future review contingent on market maturity. On staking, we support per-event consent given material variation in risks across protocols.
5. DeFi — We support "same risk, same regulatory outcome" where a controlling person is identifiable. We encourage FCA guidance on indicators and thresholds for determining control, particularly where governance operates through token voting or foundation structures.
In conclusion, CFA Institute and CFA UK support the FCA's ambition to establish a comprehensive cryptoasset regulatory framework. Given rising cryptoasset ownership among UK retail investors and the inherent risks associated with these assets, our positions are grounded in the view that investor protection and market integrity are inseparable: weak governance, poor disclosure, or inadequate redress mechanisms risk undermining confidence across the wider financial system.
We encourage continued coordination across the FCA, Bank of England, and HM Treasury to ensure coherence across prudential, conduct, and market surveillance frameworks, and welcome continued dialogue to support seamless implementation.