CryptoSlate
Britain's Financial Conduct Authority has proposed enhanced due diligence for crypto transfers involving personal, or unhosted, wallets. The nonbinding draft guidance, opened for consultation on Oct. 23 under CP26/38, seeks feedback by Dec. 24, 2026.
The FCA says the Financial Crime Guide contains no rules and imposes no new requirements. Its draft instead describes enhanced checks on transfers from a personal wallet to a UK firm as good practice within existing financial-crime controls. The regulator also criticizes firms that cannot explain third-party risk scores or rely on rigid limits for how many transaction hops they trace.
Why it matters
For a receiving firm, the proposed example would mean applying more intensive checks when crypto arrives from a self-custody wallet. The FCA says the focus is on risk-sensitive controls, not automatic suspicion of every unhosted-wallet transfer.
The draft builds on existing duties. UK cryptoasset businesses have been required to collect, verify and share transfer information under the Travel Rule since Sept. 1, 2023. Firms also remain responsible for compliance when they use outside technology or other suppliers.
Market impact
The FCA does not expect the updates to materially increase compliance activity or consumer costs, or materially change firms' products and services. It presents them as a clarification of existing expectations and established practice.
The consultation covers FCA-supervised firms, including cryptoasset businesses subject to the Money Laundering Regulations. The regulator will consider feedback before publishing a Policy Statement and final Guide text, but has not set a publication date. Firms will be watching whether the final language preserves risk-based judgment or pushes the market toward more uniform checks on self-custody flows.
Frequently asked questions
-
Are the FCA's proposed unhosted-wallet checks mandatory?
No. The draft guidance is nonbinding, contains no rules and imposes no new requirements. Departing from it alone would not establish a breach of FCA rules.
-
What would enhanced due diligence apply to?
The draft lists enhanced checks as good practice for crypto transfers involving personal or unhosted wallets, including transfers from a self-custody wallet to a UK firm.
-
What does the FCA say about third-party risk scores?
The FCA identifies it as poor practice for firms to use third-party technology without being able to explain or evidence the basis of its findings or scoring.
-
Why does the FCA criticize transaction-hop limits?
The concern is that rigid tracing rules can ignore the actual level of risk. The FCA does not reject numerical limits outright, but expects risk-appropriate measures.
-
When does the FCA consultation on the draft guidance close?
The consultation under CP26/38 closes on Dec. 24, 2026. The FCA will then consider feedback before publishing a Policy Statement and final Guide text.
CoinDesk
WuBlockchain
TheBlock