UK FCA Proposes Ban on Using Credit Cards to Buy Crypto

The Financial Conduct Authority (FCA) of the UK has proposed a ban on using credit cards to buy cryptocurrency assets.

The growing tendency of utilizing borrowed money to buy cryptocurrency has prompted the proposed prohibition, which was announced on Friday.

A recent survey commissioned by the United Kingdom’s YouGov found that this trend is not negligible anymore. In fact, customers who paid for crypto assets with a credit card or existing credit facility more than doubled from 6% in August 2022 to 14% in August 2024.

However, regulators continue to warn that crypto assets like Bitcoin are inherently volatile, and using credit to buy them puts the entire system at risk.

“We are concerned about the growing tendency of consumers to take out credit, such as payday loans, to invest in cryptoassets. In addition, we are seeing an increasing number of consumers who appear to be struggling to make minimum payments on credit card bills or other debt commitments yet are continuing to invest in cryptoassets. This suggests that some consumers may be prioritizing their cryptoasset investments over other financial commitments, which could lead to serious consequences such as unmanageable debt or legal action by creditors,” the FCA stated in its consultation paper.

The City regulator aims to foster innovation in crypto within a secure framework with the new regulations. But critics call attention to possible regulatory overreach and doubt the regulator’s capacity to seize and dispose of assets in bankruptcy, especially for decentralized protocols.

The consultation, which closes on June 13, 2025, also proposes rendering crypto derivatives less complex and readily understood by retail investors. It aims to reduce consumer debt risks connected with risky investments and minimize the threat of scams or misleading promotions.

The regulator went further, stating its intention to reassess the appropriateness of crypto investments for consumers and attempts to prevent misleading promotions.

Like the UK, the Financial Services Agency of Japan also took steps towards crypto regulation just last month with the release of a discussion paper that classified digital assets based on the socio-economic implications of the use of credit to invest in crypto assets.

The UK aims to position itself as a potential hub for digital assets. However, how the crypto community would respond to the FCA’s new norms to regulate crypto assets remains to be seen.