UK Financial Conduct Authority (FCA) Proposes Ban on Using Credit Cards to Buy Crypto

If you’ve been using your credit card to buy crypto in the UK, those days might be over. The Financial Conduct Authority (FCA) has officially proposed a rule that would stop retail investors from purchasing cryptocurrencies using borrowed funds.

This includes not only credit cards but also personal loans and even loans from crypto-specific lenders.

However, some crypto users are concerned that the UK ban will discourage innovation and limit market access.

Why the FCA Is Stepping In

The FCA’s worry is that more people are borrowing money to buy digital assets, setting the stage for a financial setback.

According to recent research by the British Center for Economic Policy Research, the proportion of people using debt to get into crypto has more than doubled, rising from 6% in 2022 to 14% in 2024.

With a market as volatile as crypto, that’s a risky trend. Prices can swing wildly, and if things go south, these investors could be left with losses and debts they can’t afford to repay.

The FCA says that sets the scene for long-term financial harm.

“We are concerned that consumers may be taking out loans to invest in crypto in a way that they can’t afford to lose,” said Megan Davies, the FCA’s director of macroprudential policy.

“We are also concerned that consumers may be misled by the marketing of crypto products.”

What the Ban Would Cover

This isn’t just a measure against using credit cards. The proposal would ban all types of borrowing to buy crypto, including personal loans from your bank and financing from crypto lenders.

The only possible exception would be stablecoins issued by firms regulated by the FCA. If those coins are properly backed and transparent, the FCA might apply different rules.

But the aim is to prevent retail users in the UK from racking up consumer debt to chase volatile crypto markets.

“We are proposing to introduce a rule that would prevent consumers from using borrowed funds to purchase cryptoassets,” said Davies.

“This is a measure that we believe is necessary to protect consumers from harm.”

What Else Is Changing

The FCA is rolling out a broader package of rules aimed at how crypto is bought, sold, and promoted in the UK.

Some of the key measures include:

The regulator also wants to keep retail users out of high-risk crypto lending and borrowing services entirely.

Public Feedback

The FCA is holding a public consultation on the proposed borrowing ban and other measures until June 13, 2025.

Some in the crypto world are worried that this could hamper innovation in the UK crypto market.

“This is a significant intervention by the FCA and it is likely to have a major impact on the crypto market in the UK,” said Ben Kingsley, a crypto lawyer at the firm Charles Russell Speechlys.

“The regulator is clearly concerned about the potential for consumer harm from crypto and is taking steps to mitigate that risk.”

However, others say that these rules are long overdue, especially after the chaos of past years with bankrupt platforms, lost user funds, and meme-coin mania.

“I think it is a good thing that the FCA is proposing these rules,” said Sam Montgomery, a crypto trader.

“We need more protection for consumers in this rapidly evolving market.”

The FCA says that it is not trying to kill crypto but that it is trying to bring some guardrails to a market that has operated without many for far too long.

If this borrowing ban goes through, it could reshape how retail users interact with crypto in the UK. No more buying Bitcoin on a credit card and hoping it moons by next week. The FCA wants investors to play with money they have, not money they owe, and that could be the start of a much more cautious era for UK crypto.