FCA cryptoasset registration, FSCS, and FOS do different jobs. FCA registration puts certain crypto businesses under anti money laundering and counter terrorist financing supervision. It is n
FCA cryptoasset registration, FSCS, and FOS do different jobs. FCA registration puts certain crypto businesses under anti money laundering and counter terrorist financing supervision. It is not the same as being authorised to offer regulated investments and it does not give consumers compensation or ombudsman rights by itself.
FSCS generally does not protect spot crypto like Bitcoin or Ether because most exchange tokens are unregulated products. FOS can investigate complaints about UK regulated firms such as banks and payment providers, but it usually cannot look into an unregulated crypto exchange’s core services. Understanding the split helps you know where protection does and does not exist.
Practically, that means spot crypto on an unregulated exchange usually has no FSCS protection and limited FOS recourse against the exchange itself. By contrast, crypto derivatives such as CFDs are regulated products, so the usual FCA, FOS and FSCS frameworks can apply to those activities.
The UK treats most spot crypto trading as unregulated. Crypto exchanges and custodians that operate in or from the UK must register with the Financial Conduct Authority for AML supervision, but registration is not a seal of approval on their products or safety. It is a status confirming the firm is within scope of the Money Laundering Regulations and is monitored for financial crime controls.
FSCS is the statutory compensation scheme for customers of failed firms carrying out regulated activities. Because spot crypto is generally not a regulated investment, FSCS cover does not usually apply to it. The Financial Ombudsman Service resolves complaints about regulated firms. It often handles disputes around banks’ treatment of payments connected to crypto, yet it typically cannot consider complaints about an overseas or unregulated crypto exchange’s custody or trading service.
FCA cryptoasset registration sits under the UK Money Laundering Regulations. Firms in scope apply for registration so the FCA can supervise their AML and CTF controls. The FCA sets out the process and expectations for registration on its guidance page for cryptoassets registration applications. It emphasises this is not an authorisation to conduct regulated activities under the Financial Services and Markets Act.
Exchange providers and custodian wallet providers are explicitly in scope. Carrying on such a business in the UK without registration can be a criminal offence under the MLRs. The FCA has also warned registered firms not to imply registration is an endorsement or that it brings consumer protections such as FSCS or FOS cover.
Key references: the FCA’s pages on how to apply for cryptoasset registration, on who needs to register, and on the AML and CTF regime for cryptoassets. The FCA also publishes a one page flowchart that maps in scope activities and jurisdictional tests.
FSCS protects customers of authorised firms when specified regulated products or activities fail. Most spot cryptoassets are not regulated products, so FSCS does not protect them. This position is set out in FSCS guidance for consumers looking at cryptocurrencies.
There is an important distinction for derivatives. Crypto CFDs and similar crypto derivatives are regulated products. When a firm offers those products under FCA authorisation, the usual complaint and compensation frameworks can apply to that activity. The FCA’s consumer warning on cryptocurrency CFDs confirms their status as regulated investments.
Key references: FSCS content on cryptocurrencies and risk, and the FCA’s consumer warning about risks of investing in cryptocurrency CFDs.
FOS assesses complaints about UK regulated firms. In crypto related cases, that often means it looks at how a bank handled a customer’s payment to a crypto platform or a suspected scam. FOS has published decisions where it investigated a bank’s actions and redress when customers were tricked into authorising payments linked to crypto.
However, FOS commonly finds it cannot investigate the unregulated crypto service itself, such as the exchange’s spot trading or custody, particularly where the exchange is overseas and not undertaking regulated activity. For worked examples, see a published FOS decision that discusses a crypto related scam and the boundaries of its jurisdiction.
Reference: the Financial Ombudsman Service’s decision DRN 5822296.
The MLRs and FCA guidance put two categories clearly in scope for cryptoasset registration: cryptoasset exchange providers and custodian wallet providers. If a business carries on these activities by way of business in the UK, it must be registered for AML supervision. Running an in scope cryptoasset business in the UK without registration can be a criminal offence.
Reference: FCA page on who needs to register.
Topic FCA cryptoasset registration FSCS FOS Main purpose AML and CTF supervision of in scope crypto firms Compensation for failures of regulated products and activities Independent dispute resolution for complaints about regulated firms What it covers in crypto Exchange providers and custodian wallet providers operating in or from the UK Not most spot crypto. May apply to regulated crypto derivatives activity Complaints about banks, payments and regulated firms involved in crypto related transactions What it does not mean Not FCA authorisation and not an endorsement. Does not itself grant FSCS or FOS cover Does not protect unregulated spot crypto bought on exchanges Does not usually cover complaints about an unregulated or overseas exchange’s trading or custody Typical takeaway for users Registration signals AML supervision, not product safety or compensation Do not expect compensation for spot crypto held on exchanges Escalate issues with your bank or authorised firm, but not the unregulated exchange itself
References: FCA guidance on how to apply for registration and the AML regime; FSCS guidance on crypto; FCA page on crypto CFDs; FOS decision DRN 5822296.
References: FCA pages on who needs to register and the AML and CTF regime; FSCS guidance on crypto; FOS decision DRN 5822296; FCA warning on crypto CFDs.
You will see FCA cryptoasset registration referenced in exchange onboarding pages and legal footers for UK facing services. It signals AML supervision only. You may encounter FSCS language when a firm offers a regulated product such as a derivative, investment or insurance. For crypto derivatives like CFDs, firms should present FCA authorisation details, and FSCS may be relevant to that regulated activity.
FOS becomes relevant when a dispute arises with a regulated firm, most commonly your bank or payment provider, over a crypto related transaction or suspected scam. If your issue is with an unregulated exchange’s custody or spot trading, ombudsman and compensation routes are usually limited, and FCA AML registration does not change that.
No. FCA registration is for AML and CTF supervision only and does not confer FSCS cover. FSCS generally does not protect most spot crypto because it is not a regulated product. See FCA guidance on the AML regime and FSCS consumer guidance.
Yes, FOS can assess complaints about a bank’s handling of your payment or suspected scam. It has published crypto related decisions assessing bank conduct. See FOS decision DRN 5822296.
Crypto CFDs and similar derivatives are regulated products. Complaints and compensation frameworks such as FOS and FSCS can apply to that regulated activity when provided by authorised firms. See the FCA’s consumer warning on cryptocurrency CFDs.
Exchange and custodian wallet providers that carry on in scope cryptoasset business in the UK must register for AML supervision. Operating without registration can be a criminal offence under the MLRs. See the FCA page on who needs to register.
Usually not. FOS often concludes it cannot investigate the unregulated crypto service itself, especially when the exchange is overseas. It can consider complaints about UK regulated firms involved in the payment chain. See FOS decision DRN 5822296.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
