UK finalises crypto rules; firms must get FCA licence by 2027

The Financial Conduct Authority has published its final crypto regulatory framework, requiring crypto firms operating in the UK to obtain FCA authorisation. The licensing window opens in September and closes on Feb. 28, 2027. The new rules become effective on Oct. 25, 2027. Trading venues, custodians, stablecoin issuers, staking services and other intermediaries will fall under the regime.

The framework introduces mandatory licensing, capital stress-testing requirements, strengthened rules on market manipulation and insider dealing, and simplified capital standards for stablecoin issuers. The FCA said firms operating in the UK will be held to standards similar to other financial service providers. Pre-application support meetings will be available from next month.

Firms that currently hold only anti-money-laundering authorisation will not have those approvals converted automatically and must apply for FCA authorisation under the new regime. The regulator has put in place transitional savings provisions that allow some companies to continue specified activities for a limited period while they seek full authorisation. A policy statement will be published at a webinar on July 17, with a further statement scheduled for September to clarify how the regulatory perimeter applies to cryptoasset activities.

Stablecoin requirements retain the core framework but simplify several technical elements. Issuers must place reserves in a statutory trust, remove unallocated backing fund accounts and provide defined withdrawal rights for users. The rules permit a limited 5% excess in the backing asset pool and allow intragroup custody in narrowly defined circumstances with safeguards. The FCA will consult with the Bank of England later this year on rules for stablecoins that HM Treasury recognises as systemic.

Capital and operational resilience expectations will apply to firms using distributed ledger technology. The FCA plans a separate consultation later this year on decentralised finance guidance and operational resilience for DLT firms. It will also consult on updates to its Financial Crime Guide to align anti-money-laundering expectations with the new regime.

David Geale, executive director of payments and digital finance at the FCA, described the framework as providing regulatory certainty while preserving space for innovation. Matthew Long, director of payments and digital assets, said the regulator will take a case-by-case approach to DeFi and that systems with no identifiable person undertaking the activity may fall outside the regulatory perimeter.

Firms preparing applications should expect capital stress tests and compliance with the updated market conduct rules. Under the FCA timetable, companies have about 17 months from the opening of the licensing window to meet the new standards before the regime becomes effective in October 2027.