The United Kingdom is taking a bold step in crypto regulation by planning to ban consumers from buying cryptocurrencies with borrowed money, such as credit cards. The Financial Conduct Authority (FCA) announced this move as part of its wider efforts to protect retail investors from high-risk financial behavior.

What Happening?

According to the FCA, the number of people using loans to invest in crypto jumped from 6% in 2022 to 14% in 2023. These investors are often unaware of the risks involved in crypto trading, especially when leveraging borrowed funds. The regulator compared this kind of behavior to gambling due to the extreme volatility of digital assets.

The proposed rules would not only ban purchases using credit, but also introduce requirements like credit checks and investment experience assessments for those engaging in crypto-related lending and borrowing activities.

Part of a Bigger Crackdown

This announcement comes just days after the UK government introduced draft legislation to fully regulate the crypto industry. The new framework aims to bring cryptocurrency exchanges, brokers, and custodians under financial regulatory oversight for the first time.

The UK wants to position itself as a global crypto hub, but with clear rules to ensure transparency, consumer protection, and operational security. As of 2025, an estimated 12% of UK adults have interacted with crypto in some form—up sharply from just 4% in 2021.

Mixed Reactions from the Industry

While the FCA’s intent is to safeguard the public, critics warn that the ban may push investors toward unregulated offshore platforms where they face even greater risks. Others are concerned about the complexity of the new framework and whether the FCA can effectively enforce it.

Industry stakeholders have been invited to provide feedback, with consultations open until June 13, 2025. Final regulations will be rolled out after these discussions conclude.

What This Means for Crypto Globally

The UK’s crypto clampdown is being watched closely around the world. If successful, it could set a new global standard for how governments regulate the rapidly evolving digital asset space. The key challenge will be finding the right balance—supporting innovation without compromising investor safety.

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