United Kingdom Unveils FSMA-Based Regulatory Regime for Cryptoassets
The United Kingdom is bringing the regulation of crypto-related services and activities within the scope of the regime that currently applies to traditional financial services firms set out in the Financial Services and Markets Act 2000 ("FSMA").
The United Kingdom published draft rules in the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 (the "Cryptoasset Regulations"). Currently, traditional firms wishing to carry on specific financial services and activities in the United Kingdom ("regulated activities") are required to obtain a licence from the Financial Conduct Authority ("FCA"). The Cryptoasset Regulations, submitted to Parliament on December 15, 2025, will also bring crypto-related activities within the FCA's jurisdiction, regulating crypto services in the same way as traditional financial services, and requiring cryptocurrency firms to seek authorization from the FCA to operate in or to the United Kingdom.
The new regulated activities include issuing qualifying stablecoins in the United Kingdom, operating cryptoasset trading platforms, dealing in cryptoassets (as principal or agent), arranging cryptoasset transactions, safeguarding and custody of cryptoassets, and qualifying staking. Firms engaging in regulated cryptoasset activities will require full FCA authorization with specific crypto permissions, must hold regulatory capital, and comply with FCA principles.
Authorizations are required even if the firm is currently authorized under FSMA for other activities, and firms already registered with the FCA under UK money laundering regulations of 2017 do not convert into a FCA authorization. Any firm engaging in regulated cryptoasset activity must apply to the FCA for crypto-specific permissions. Crypto firms will generally need FCA authorization to communicate or approve UK crypto marketing materials, and reliance on third-party approvers will be limited. Senior staff will need to be "fit and proper" and approved by the FCA, the same as TradFi firms.
The FCA will introduce a dedicated cryptoasset sourcebook and extend parts of the FCA Handbook to crypto firms. Public offers of cryptoassets will be restricted, with criminal sanctions for breaches, and a new market abuse regime will cover insider dealing, market manipulation, and disclosure of inside information, including insider list requirements in some cases.
The application window is expected to open in September 2026. Firms applying on time will operate under the saving provision, while late applicants may be limited to servicing existing contracts. Firms should engage early with the FCA, map their activities to the new regime, and plan for significant lead times around authorization, governance, capital, and controls ahead of the regime taking effect on October 25, 2027.
