A major shift is coming for crypto investors in the UK. On May 2, 2025, the Financial Conduct Authority (FCA) officially proposed new rules that could ban the use of borrowed money to purchase cryptocurrencies. This includes credit cards, personal loans, and even crypto-specific lending services. The move is being widely referred to as a ban on buying crypto with debt.
This move could drastically change how retail investors engage with crypto, and it’s sparking intense debate.
Why Is the FCA Proposing This Ban?
The FCA’s main concern is consumer protection. Over the past two years, there has been a sharp increase in people using debt to buy cryptocurrencies. According to the FCA’s research, the number of UK investors using borrowed funds to invest in crypto jumped from 6% in 2022 to 14% in 2024.
With cryptocurrencies known for extreme price volatility, this is risky. When values drop, borrowers can be left with massive debts they cannot repay. The FCA argues that the proposed ban on buying crypto with borrowed funds will help reduce the risk of long-term financial harm.
What Exactly Is Being Banned?
This isn’t just about credit cards. The proposed rule would ban all forms of borrowing used to buy digital assets. That includes:
- Credit cards
- Personal loans from banks
- Financing from crypto lending platforms
There may be an exception for stablecoins, but only if they are issued by FCA-regulated firms and are fully backed and transparent. Even then, the decision is still under review.
In short, if you’re using money you don’t currently have to buy crypto in the UK, the FCA wants to put a stop to it.
The Bigger Picture: A Wider Crypto Crackdown
The ban on buying crypto with borrowed money is just one part of a much broader regulatory package. The FCA is working to strengthen oversight across the UK’s crypto industry.
Here are some of the additional proposals being considered:
- Requiring all crypto trading platforms to register with the FCA
- Banning platforms from trading against their customers
- Enforcing clearer pricing and trade execution transparency
- Prohibiting payment for order flow, a practice where brokers are paid for directing trades
- Making staking providers legally responsible for third-party validator failures
- Restricting retail investors from high-risk lending and borrowing products
These measures aim to bring the crypto market more in line with traditional finance, where investor protections are far stronger.
The Public Consultation Period
The FCA is not rushing these changes. A public consultation is open until June 13, 2025, and feedback is being welcomed from industry stakeholders, investors, and the public.
Supporters of the proposal argue that the rules are long overdue. After years of meme coins, collapsed platforms, and lost investor funds, they say it’s time for stricter guardrails.
However, critics worry that such rules will slow innovation, limit financial freedom, and push crypto activity underground or overseas.
Why This Matters Now
The crypto space has seen enormous growth in recent years. Coins like Bitcoin have reached record highs, trading near $96,420 as of early May 2025, with a market cap of over $1.9 trillion. This has lured many new investors hoping to catch the next wave of returns.
But chasing those gains with borrowed money adds a layer of risk that regulators believe is too dangerous to ignore.
And it’s not just about personal losses. High levels of crypto-related debt could ripple into the broader economy if defaults increase.
A New Era for Crypto in the UK?
If the ban is implemented, it would mark the start of a more cautious and regulated crypto era in the UK. Investors would need to use their own money to buy digital assets. No more betting the rent on a Bitcoin rally. No more taking out loans to chase the next meme coin.
While this could cool speculative trading, it may also lead to a healthier, more sustainable market in the long run.
At the same time, the UK’s stance could set a precedent. Other countries may watch closely and adopt similar rules if they see success in reducing financial harm.
Final Thoughts
The FCA says its goal isn’t to shut down the crypto industry. It’s to protect people from risky financial behavior. By banning the use of credit and loans to purchase crypto, it hopes to encourage more responsible investing.
Still, these proposals won’t become law overnight. With the public consultation ongoing, there’s still time for the rules to be adjusted. But one thing is clear: the UK is taking crypto regulation seriously.
Investors should start preparing now. If you’re in the UK and using borrowed money to invest in digital assets, that option may soon disappear.
