Britain's FCA to Ban the Use of Credit Cards in Cryptocurrency Transactions

Key Highights 

• FCA to ban the use of credit cards to buy crypto assets. 

• Britain aims to protect customers by introducing clear regulation overseeing crypto sector 

In a major move, the United Kingdom is set to ban the use of credit cards to buy Crypto and their access to other crypto lending products.

According to Britain's finance minister, the move will bring crypto under compulsory regulation, with crypto exchange platforms, dealers, and issuers all operating under the same rules.

In this regard, the UK's Financial Conduct Authority (UK FCA) has established new measures that include, the ban on using credit cards to purchase cryptocurrencies. This low is proposed as the number of individuals using loans to buy crypto has grown.

According to Britain's government, the number of crypto traders who bought crypto assets such as Bitcoin using credit spiked from 6% in 2022 to 14% in 2024. Since crypto assets are increasingly volatile, authorities have warned over the use of credit to acquire them.

When one uses credit to accumulate crypto and prices crash, they are left in serious debt and potential financial ruin. Thus, FCA hopes to foster crypto innovation within secure regulations that protect and benefit all players.

Equally, FCA will seek to improve transparency and consumer understanding of staking. According to FCA, 27% of UK adults who own crypto have used staking.

While some have viewed the move by FCA as a major milestone forward, others argue the move is a regulatory overreach. The proposal by the FCA aims to reduce debts related to digital assets such as Bitcoin.

However, since stablecoins aim to keep a fixed value relative to other assets such as the U.S. dollar or other currencies, consumers will be allowed to use credit cards and borrow money to buy them.

Besides the ban on the use of credit cards, the FCA is developing a comprehensive framework to put all crypto assets activities under oversight. Thus, the regulator is proposing regulations across the crypto industry including intermediaries, lenders, and trading platforms.

According to FCA, a comprehensive oversight hopes to improve integrity, protect consumers, and align with the changing global landscape.

Cryptocurrency Adoption in the U.K

Over the past years, crypto use and trading have become increasingly popular in Britain. As such, there are around 7 million or 12% of the adult population people who own or trade crypto in the country.

This data shows that UK consumer markets are growing steadily and adoption in the country is on the rise.

Despite the massive adoption, Crypto remains largely unregulated as per FCA. Because of the growing adoption and usage of crypto FCA seeks to regulate the sector to crack down on bad actors while supporting legitimate innovation in the industry.

The recent development especially in protecting consumers is a welcome move by many users. A comprehensive oversight will offer protection to crypto users from fraudulent developers, market makers, and exchange platforms.

Recently, customers have suffered extensively from failed projects. For example, the Mantra [OM] token crashed by over 95% leaving most holders counting losses.

The same fate befell Move holders. These developments offer consumers signs of relief in a country that’s going big on crypto.