The UK government has tightened its cryptoasset rules, updating legislation to bring DLT‑based versions of established financial instruments within the scope of the Financial Services and Markets Act — the framework that sets out which activities require regulation.
The amendment, published May 26, set out in a policy note accompanying changes to the FSMA 2000 (Regulated Activities) (Amendment) Order and the 2026 Cryptoasset Regulations, updates the definition of a cryptoasset to include digitally represented value or rights that can be transferred, stored or traded using cryptographic or distributed‑ledger technology.
The drafting is intended to ensure the regime applies consistently where DLT is used to issue or service instruments that would otherwise fall within existing FSMA categories.
The government describes the change as part of its “phased and proportionate” approach to regulating cryptoassets. The amendment clarifies how cryptoasset‑related activities interact with established regulated activities under FSMA, aiming to avoid gaps where firms use distributed‑ledger technology to perform functions that mirror traditional financial‑services models.
The updated drafting also refines the treatment of custody, exchange and arranging activities so they apply in a technology‑neutral way. According to the policy note, this is designed to provide greater clarity for firms that hold, transfer or facilitate transactions in instruments recorded or transferred using DLT.
By broadening the definition and aligning it more closely with the wider FSMA framework, the amendment establishes a clearer basis for supervising activities involving tokenised instruments. The government says the changes support its objective of ensuring that cryptoasset‑related activities are subject to appropriate regulatory oversight, consistent with the risks they pose and the functions they perform.
The note emphasises that the amendment is a technical adjustment to ensure the regulatory perimeter operates as intended as the UK continues to implement its cryptoasset framework. It also reiterates the government’s commitment to maintaining a regime that is flexible enough to accommodate different technological models while remaining anchored in existing financial‑services legislation.
The changes will take effect alongside the broader package of cryptoasset regulations already scheduled, with the updated definitions and clarifications intended to support firms in understanding how their activities fit within the FSMA structure.
Full information can be found here.
