- The Payments Association has criticized the FCA’s proposed ban on using credit cards for crypto purchases, arguing it unfairly equates investing in crypto with gambling.
- The Association urges regulators to exempt stablecoins from the proposed restrictions.
- While the U.K. favors a centralized, regulator-led framework for stablecoin oversight, the U.S. GENIUS Act proposes a state-delegated model.
The Financial Conduct Authority’s (FCA) latest proposal to prohibit retail consumers from using credit cards to purchase cryptocurrencies is being criticized by the U.K. Payments Association, which warns that the move could stifle innovation and hinder adoption.
The FCA released a discussion paper seeking feedback on whether consumers should be banned from funding crypto purchases with credit cards or other forms of borrowing.
Top Trending Crypto Articles
Payments Association Pushes Back
The U.K. Payments Association has voiced strong opposition to the FCA’s proposal, arguing that it could limit consumer choice and mischaracterize legitimate investment activity.
In a statement provided to CCN, Riccardo Tordera-Ricchi, Director of Policy and Government Relations at the Payments Association, urged the FCA to take a more “nuanced and proportionate approach” to regulating the fast-evolving cryptoasset market.
“We challenge the proposed ban on credit card purchases for crypto, as it unfairly equates legitimate investment activity with gambling,” said Tordera-Ricchi.
He pointed out that consumers already face obstacles when trying to buy crypto using debit cards or current accounts due to fraud prevention measures.
“We believe consumers should be trusted to make informed decisions within their existing credit limits,” he added.
While acknowledging the importance of consumer protection, Tordera-Ricchi noted that the banking sector already employs credit controls on high-risk investments, suggesting that a blanket ban may not be necessary.
“That said, we recognise the need to resolve legitimate concerns around Section 75 of the Consumer Credit Act,” he said.
“Our banking sector members note that existing industry practices already enable controls on credit card use for high-risk investments beyond crypto.
“From this perspective, limiting credit card use for retail crypto purchases is not an arbitrary restriction but aligns with broader credit risk management principles for high-volatility assets,” he added.
Call for Stablecoin Distinction
A central argument in the Association’s position is the need to differentiate between types of crypto, particularly stablecoins versus speculative tokens.
Tordera-Ricchi stressed that stablecoins, given their price stability and utility, should not be subject to the same restrictions.
“We strongly support exempting qualifying stablecoins from any credit-financed purchase bans,” he said.
“Unlike speculative tokens, stablecoins are typically acquired for their utility and low volatility, not for price appreciation,” he added.
As of June 19, the market capitalization of all stablecoins has officially surpassed $250 billion, coinciding with the U.S. Senate’s passage of the amended GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins).
“We aim to ensure regulatory restrictions are narrowly targeted at high-risk, unbacked cryptoassets, without impeding the lawful use of stablecoins,” said Tordera-Ricchi.
However, not everyone in the industry is opposed to the FCA’s approach.
Nick Jones, Founder and CEO of Zumo, expressed support for the regulator’s decision to consult with stakeholders:
“By opening consultations, the FCA has shown its willingness to work in tandem with the industry to achieve our shared goals,” Jones told CCN.
He emphasized the importance of a balanced regulatory framework that accounts for varying risk levels and investor profiles.
“The new framework must be proportionate to the risks posed, with appropriate differentiation of investor classes,” he added.
“With crypto now part of the institutional fabric, there is also a pressing need to find the right balance for retail investors, ensuring they’re protected without restricting their freedom.”
Jones also highlighted the responsibilities of crypto providers under the FCA’s Consumer Duty rules.
“Providers should be mindful of acting in line with the Consumer Duty, and take the time to educate customers about the cryptoassets they are offering,” he said.
However, he also raised concerns about the potential consequences of an outright ban on credit-funded crypto purchases.
“And while I understand the rationale, I’d question whether a blanket ban on borrowing to fund crypto purchases is in the best interests of consumers, given the importance of choice and accessibility in the financial services arena.”
Stablecoin Regulation: U.K. vs. U.S.
As stablecoins inch closer to mainstream adoption, both the U.K. and the U.S. are working to define how these digital assets should be governed.
However, their regulatory philosophies diverge.
In April, the U.K. Treasury unveiled long-awaited draft rules for the crypto sector , including specific provisions for stablecoins.
The proposal would give the FCA new powers to supervise the issuance and custody of “qualifying stablecoins,” with fiat-backed reserves treated under client money rules.
In contrast, the U.S. GENIUS Act, recently passed by the Senate, is the country’s most advanced federal stablecoin legislation.
Unlike the U.K.’s regulator-led model, the GENIUS Act would delegate oversight to state authorities for stablecoin issuers with circulation under $10 billion.
Top Trending Crypto Articles
Was this Article helpful?
