The United Kingdom intends to impose new restrictions on the use of credit cards for purchasing Bitcoin and cryptocurrencies, in a move that reflects growing concern over the escalation of consumer debt linked to investing in high-risk digital assets.
This proposal came as part of a discussion paper issued by the Financial Conduct Authority (FCA) titled DP25/1, warning that purchasing cryptocurrencies with borrowed funds could lead to unsustainable debt, especially given price volatility and some individuals relying on the value of those assets to meet their obligations.
The authority is considering a complete or partial ban on the use of credit, including credit cards, to finance cryptocurrency purchases.
This includes a direction to curb excessive borrowing and avoid losses resulting from speculative trading.
The paper also noted that a number of investors mistakenly believe they are covered by compensation schemes such as FSCS or FOS, while these mechanisms do not cover most digital assets.
At the same time, qualified stablecoins may be exempt from these proposed restrictions, reflecting a potential recognition of their importance in payment and transfer processes.
This initiative comes as part of broader efforts to regulate the cryptocurrency sector in the United Kingdom.
The regulatory paper outlines the contours of a new framework that includes trading platforms, brokers, custody services, lending, depositing, and even decentralized finance (DeFi) activities.
The authority requires market participants to obtain binding licenses and comply with capital, liquidity, and risk management requirements, in line with traditional finance standards.
The scope of the rules is expected to extend even to front-end operators and governance token holders in DeFi projects, indicating a strict and wide-ranging regulatory approach.
The authority will receive comments and feedback on the proposals until June 13, 2025, before moving to the official policy drafting phase.
These regulatory steps follow the British government's announcement of a new bill to regulate cryptocurrency assets, establishing standards related to transparency, consumer protection, and operational stability for companies in the sector.
