UK Proposes Ban on Borrowing to Buy Crypto

The United Kingdom’s Financial Conduct Authority (FCA) has proposed a significant new rule that would ban retail investors from using borrowed money—including credit cards—to purchase cryptocurrencies. This move is part of a broader effort to tighten regulations around the digital asset space and curb the risks posed to inexperienced investors. The FCA believes that leveraging debt to invest in highly volatile assets like crypto poses a serious threat to consumer financial well-being, especially given the dramatic swings often seen in crypto markets.

This proposed ban reflects growing concerns among UK regulators about the speculative nature of cryptocurrency investing and the potential for financial harm among retail participants. By restricting credit-based purchases, the FCA hopes to reduce the number of people who take on unsustainable debt chasing high-risk returns. The regulator has also cited data suggesting that many crypto buyers do not fully understand the risks associated with these assets, and a ban on borrowed funds may force a more cautious approach to investing.

The initiative is also seen as part of the UK’s broader strategy to bring crypto regulation more in line with traditional financial products. Alongside other recent proposals around advertising standards, custody requirements, and crypto trading disclosures, the FCA’s credit ban could become a key element of a more structured and investor-protective framework. If adopted, this regulation would place the UK among the stricter jurisdictions globally in terms of crypto oversight, signaling a shift from the country’s previous more innovation-friendly stance.