UK to Ban Credit Card Purchases of Crypto, Allows Stablecoins

The UK’s financial watchdog plans to block consumers from buying cryptocurrencies using credit cards, part of a broader effort to tighten oversight of digital assets and limit financial risks for retail investors. The Financial Conduct Authority ( FCA ) announced on Friday that it is exploring a range of restrictions, including banning the use of credit cards and e-money credit lines to buy cryptoassets. The proposal follows new draft laws introduced this week that would bring crypto exchanges, issuers, and service providers under the same regulatory framework as traditional financial institutions . The move comes as crypto ownership in Britain climbed, with roughly 7 million adults with around 12% of the population now holding digital assets. Despite its growing popularity, the FCA continues to warn that investing in crypto remains highly risky, saying consumers should be prepared to lose all their money. While credit-based crypto buys may soon be off-limits, the proposed rules would still allow the use of borrowed funds to buy stablecoins—provided they are issued by FCA-regulated firms. The regulator is also looking into rules that would govern crypto lending and borrowing, including credit checks and investor knowledge assessments. The FCA highlighted risks like lack of collateral, poor transparency , and limited understanding among consumers as key concerns in the lending space. A recent FCA-commissioned survey found that the number of people using borrowed money to buy crypto more than doubled from 6% in 2022 to 14% last year. The agency is also seeking to boost transparency around crypto “staking,” a process in which users lock up tokens to earn network rewards. About 27% of UK crypto holders used staking, according to the same survey. Legal experts say the FCA is trying to strike a delicate balance between curbing abuse and allowing innovation to thrive. “This is no easy feat,” said Hannah Meakin, a partner at Norton Rose Fulbright. “The proof will be in how effectively the rules work once implemented.” The UK has been playing catch-up with the European Union, which launched its Markets in Crypto-Assets ( MiCA ) framework last year. Meanwhile, in the U.S., regulatory pressures on crypto firms eased somewhat under the Trump administration.