UK makes crypto legislation

Parliament has now made the regulations which will deliver the UK’s regulatory framework for cryptoassets. Firms carrying on regulated crypto activities in the UK will need to be ready to comply with the new regime from 25 October 2027. Before then they will need to apply to the Financial Conduct Authority for a licence or update their existing permissions.

The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 were made on 4 February 2026. They:

• specify regulated cryptoasset activities, meaning that businesses carrying on these activities will need to be authorised or exempt, or risk committing a criminal offence;

• ban public offers of qualifying cryptoassets in the UK, unless an exemption applies;

• establish a market abuse framework for qualifying cryptoassets;

• make consequential changes to the UK’s money laundering and financial promotions regimes; and

• enable the FCA to create an application period to enable transition into the new regime.

The crypto regulations are accompanied by explanatory notes. These clarify several aspects of the legislation. For example:

• tokenised versions of existing regulated investments, such as equities and bonds, are excluded from the definition of qualifying cryptoasset;

• mere records of value or contractual rights are also excluded from the definition of qualifying cryptoasset;

• issuing qualifying stablecoins in the UK will be regulated and the FCA will set rules on e.g. backing assets, redemption and the making of offers;

• stablecoins issued outside the UK will be treated as qualifying cryptoassets, meaning they will be subject to the requirements for cryptoasset public offers and admissions to trading;

• the activities of dealing in cryptoassets as principal or agent, or arranging deals, are intended to capture crypto lending and borrowing;

• overseas firms carrying on certain crypto activities (e.g. dealing) only for UK institutional customers will not be required to be authorised, assuming those institutional customers are not acting as an intermediary to a UK consumer;

• the market abuse regime for cryptoassets captures activities in and outside the UK;

• e-money and stablecoins are mutually exclusive; and

• the Government intends to bring stablecoins into payments regulation as part of upcoming updates to the UK payments framework.

HM Treasury estimates that the total cost to business of introducing the regime will be at least £24 million. This largely comes from firms paying authorisation fees and annual levies to the FCA but also considers costs associated with submitting applications to the FCA.

Firms will also need to shoulder the cost of implementing and continuing to comply with the FCA’s rulebook for cryptoassets. The FCA is consulting on the rules that will apply to regulated cryptoasset activities (e.g. CP26/4). It expects to finalise its regime later this year.