In brief
On 4 February 2024, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (“Cryptoassets Regulations”) were made, establishing a comprehensive regulatory framework for cryptoassets in the UK. Under this new regime, cryptoasset firms falling within scope will be subject to regulatory requirements, including, where relevant, authorisation by the FCA. The Cryptoassets Regulations define the categories of cryptoassets and activities subject to regulation, expand the scope of the financial promotions regime to align with the new regulated activities, and make provision for rules relating to market abuse and public offers. The new regime will take effect on 25 October 2027, with the authorisation gateway opening in September 2026. UK cryptoasset firms should review their current and planned activities to determine if they fall within the scope of the new regime, and those seeking authorisation should start engaging with the process now to ensure they are prepared to move quickly once the gateway opens.
In depth
Cryptoassets and regulated activities
The Cryptoassets Regulations define the categories of cryptoassets that will be subject to regulation, namely: qualifying cryptoassets, qualifying stablecoins, and specified investment cryptoassets (e.g., tokenised versions of existing specified investments) (“SICs”). Importantly, the Regulations also amend the Electronic Money Regulations 2011 to clarify that e-money excludes stablecoins, such that a thing is only one or the other. The Cryptoassets Regulations also introduce a range of regulated activities, including issuing qualifying stablecoins, safeguarding qualifying cryptoassets and SICs, operating trading platforms, dealing and arranging activities, and qualifying cryptoasset staking, with certain exemptions applying to specific activities.
Importantly, the regime has a wide territorial scope, particularly in comparison to the regime applying to traditional finance activities. A firm involved in the sale or subscription of a qualifying cryptoasset to or by a UK consumer must obtain authorisation, even if that firm is based overseas. However, if a UK authorised trading platform or dealer acting as principal intermediates between the firm and the UK consumer, the overseas firm is not required to be authorised in the UK. Overseas firms serving only institutional investors may also be exempt from authorisation, provided those investors are not acting as intermediaries to UK consumers. Notably, the territorial scope for issuing qualifying stablecoin is tighter: a firm undertaking the issuance activity from a UK establishment, or arranging for the stablecoin to be issued in the UK, will need to become authorised, but outside of this stablecoins issued overseas will generally be treated in line with other qualifying cryptoassets under the regime for public offers and admissions (as explained below).
Financial promotions
The Cryptoassets Regulations further expand the financial promotions regime to include the new cryptoasset regulated activities. This is achieved by: (i) aligning the definition of “qualifying cryptoassets” under the financial promotions regime with that under the regulated activities regime; and (ii) extending the scope of the regime’s controlled activities to cover safeguarding qualifying cryptoassets and SICs, operating qualifying cryptoasset trading platforms, and qualifying cryptoasset staking (unless such staking constitutes the controlled activity of arranging deals). Additionally, firms registered with the FCA for cryptoasset business under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLRs”) registration regime will no longer be permitted to approve their own financial promotions – firms that are authorised with permission to undertake the new regulated cryptoasset activities will be able to approve their own financial promotions once the new regime takes effect.
Market abuse, public offers and admissions to trading
The instrument also introduces designated activities regimes relating to (i) market abuse as well as (ii) public offers and admissions to trading). Under these regimes, the FCA will regulate certain activities, but firms themselves will not need to be authorised. For market abuse, the framework prohibits insider dealing and market manipulation for certain cryptoassets, establishes obligations relating to the public disclosure of inside information, and includes requirements for related systems and controls. The public offers and admissions to trading regime prohibits any person from making a public offer of a qualifying cryptoasset in the UK unless the offer falls within a specified exception (listed in Schedule 1 to the Cryptoassets Regulations), and empowers the FCA to make rules about public offers, admissions to trading and related disclosure requirements.
The authorisations gateway
The Cryptoassets Regulations are not yet in force; the new regime will take effect on 25 October 2027. The FCA has announced that the application period for authorisation will open on 30 September 2026 and close on 28 February 2027, with the FCA expecting to determine applications submitted during this period before the regime takes effect. Existing firms registered under the MLRs must apply for authorisation, while those with Part 4A permission wishing to carry out regulated cryptoasset business will need to apply for a variation of permission; applications assessed in the order received, with no priority given to existing MLRs-registered or authorised firms. A firm applying for authorisation during the application period will be able to continue to provide cryptoasset services until its application has been finally determined (via a savings provision in the Cryptoassets Regulations). The savings provision also covers the applicant firm’s overseas group members for the purposes of the relevant cryptoasset activity to which the application relates.
While the authorisations gateway will remain open after the application period closes, a firm applying for authorisation outside the application period will not be able to avail itself of the savings provision if it is not authorised at the point the new regime goes live. Instead, the firm will enter the transitional provision set out in the Cryptoassets Regulations. While in the transitional provision, the firm will only be able to conduct the new regulated cryptoasset activities to the extent necessary for the performance of a preexisting contract entered into before the firm entered the transitional provision. It will not be able to enter into new contracts with existing or new UK customers.
Under certain circumstances, the FCA may direct that firm operating via the savings provision should instead enter the transitional provision.
Next steps for cryptoasset firms
UK cryptoasset firms should review their current and planned activities to determine if they fall within scope of the new regime. We recommend that firms seeking authorisation start preparing their application packs early, given the limited time available before the application period opens and the extensive information typically required (such as details about the firm, individuals needing FCA approval under the Senior Managers Regime, compliance plans, business plans, and financial forecasts). Firms should be thinking about:
- Capital structure and liquidity management
- Key individuals that will undertake senior management roles under the Senior Managers Regime (particularly the CEO, money laundering reporting officer, head of compliance etc.)
- Funding sources
- Safeguarding arrangements
- Business plans
Existing MLRs-registered or authorised firms should expect supervisory contact from the FCA in relation to their plans for authorisation under the new regime.
The FCA intends to publish downloadable application forms in July 2026 ahead of the application period opening; although these forms are not yet available, firms can get ahead by identifying and organising the necessary data to streamline the application process once the application period opens. It is also very important that firms engage with the FCA’s numerous ongoing consultations relating to the new regime; although the FCA expects that it will have final rules and policy in place before the application period opens, this timing is not guaranteed and therefore firms should not wait for publication of these final rules before preparing to comply with the new regime.