Cryptoassets

A digital asset is anything of value that is represented digitally or electronically. A cryptoasset is a type of digital asset whose ownership is recorded on a ledger shared among multiple users, and where the integrity of the ledger is upheld by a type of technology called cryptography. One example of a cryptoasset is Bitcoin.

Because cryptoassets can be moved between users without intermediaries, advocates argue they could make payments cheaper and quicker. However, currently cryptoassets are primarily used for speculative investment. Critics have argued that such investments are nothing more than gambling and should be regulated as such. The privacy features of cryptoasset ledgers also make them a popular tool for criminals looking to steal or launder money.

In 2026, Parliament passed legislation bringing various cryptoasset activities into the remit of the Financial Conduct Authority (FCA). The FCA intends to publish rules for the sector in 2026 which come into force in October 2027.

What are cryptoassets and how do they work?

When someone wants to send money to someone else, they typically have two options: cash or electronic money (for example, a card payment). Cash has the advantage that buyer and seller can validate the payment themselves (peer-to-peer). Electronic payments require intermediaries like banks (which typically charge fees) to validate payments but can be used to transfer payments of any size across any geography.

The first cryptoasset, Bitcoin, was designed to marry the advantages of these two payment systems: peer-to-peer payments, but electronic.

A key role of intermediaries in traditional electronic transactions is to keep a secure record of who owns what that consumers can trust. Cryptoassets remove the need for traditional payment intermediaries by making this record public rather than private in a shared, distributed ledger (for example, a blockchain). A transaction can only be added to this ledger if users of the network agree a transaction is valid; the ledger is then redistributed to users of the network.

A cryptoasset is a digital asset whose ownership is recorded on a distributed ledger, of which there are various types. ‘Cryptocurrencies’, like Bitcoin, can be used for payment or bought by investors for speculation. ‘Stablecoins’ are cryptocurrencies backed by real-world assets designed to maintain value with national currencies like the US dollar. ‘Security tokens’ are cryptoassets which record ownership of financial securities like company shares or debt.

Use of cryptoassets

Research by the Financial Conduct Authority conducted between August and September 2025 found 8% of UK adults own cryptoassets, significantly down on 12% in 2024, but still double that in 2021.

In October 2025 the International Monetary Fund (PDF) reported that the total value of cryptoassets was around $4.2 trillion; for context, this is equivalent to approximately 7% and 13% of the US stock and debt markets, respectively.

The main use of cryptoassets remains speculative trading rather than payments. Research by McKinsey and Artemis Analytics indicates that payments involving stablecoins account for a fraction of a percent of total payments made worldwide.

Benefits and drawbacks

Cryptoassets, and the distributed ledger technology they rely on, offer a possibility for all types of ownership and transactions to be managed without the need for intermediaries. In the world of payments, that could mean cheaper fees for sellers and so cheaper prices for consumers, and faster payment processing. Eliminating the need for intermediaries has the potential to expand access to financial services to areas of the world poorly served by financial institutions. Cryptoassets also offer privacy, as ownership is recorded using pseudonyms.

However, this privacy has meant cryptoassets can be attractive to criminals. The lack of intermediaries involved in the system means criminals can steal or launder cryptoassets without the oversight of banks and payment processors, which have obligations under law to identify and report suspected crime. Because cryptoassets are primarily used for speculative investment, there has been concern about the losses made by retail investors trading what is a highly volatile asset class.

Policy and regulation

In 2026 Parliament passed regulations bringing various crypto activities into the regulatory remit of the FCA. These include issuing new stablecoins, selling other types of new cryptoasset and operating cryptoasset exchanges. From October 2027, firms providing these services will need to be authorised by the FCA, follow its conduct rules and customers will be able to take complaints about firms to the Financial Ombudsman Service.