Today (15 April), the Financial Conduct Authority (FCA) has published a consultation setting out proposed guidance on how it intends to regulate the UK’s crypto market and define where the regulatory perimeter will begin and end. This should support the implementation of a more formal regulatory framework.
The regulator hopes this guidance will reduce uncertainty, encourage competition, improve consumer protection, and maintain the integrity of the market, ahead of new regulations due to come into force in October 2027.
For years, much of the crypto market has operated in a grey area, particularly around activities such as trading, custody, and the issuance of stablecoins. The consultation aims to define these activities more precisely and align them with other financial services, creating a clearer framework for how firms should operate and manage risk across activities such as trading, custody and intermediation.
In practice, crypto firms will need to assess whether activities are carried out in the UK, whether they are conducted ‘by way of business’, and whether exclusions or exemptions apply. Firms that were previously registered under Money Laundering Regulations will need to seek FCA authorisation, expanding the regulator’s perimeter significantly. The guidance also clarifies that some overseas firms may fall within scope where they provide services to UK consumers.
In its full 97-page Consultation Paper, the FCA said it wanted to develop “a competitive and sustainable cryptoasset sector where UK consumers are served by authorised cryptoasset firms and can make informed decisions”. The new perimeter, it believes, “will give it the tools to strengthen protections for consumers and support fair, transparent and orderly markets as the sector matures.”
The proposals form part of the FCA’s broader crypto roadmap and include updates to existing regulatory guidance to reflect the expanded perimeter.
Not all crypto activities will fall within this new perimeter, however. Technical activities, such as providing infrastructure or validating transactions, could be excluded, as well as some intra-group arrangements or incidental activities, depending on their structure.
From a market perspective, the regulator is setting the UK on a clear path towards a more formal, comprehensive crypto framework. For institutions, this could provide greater clarity and a more investable environment, while for others it may raise questions around compliance costs and long-term viability.
The FCA is inviting feedback ahead of finalising the regime.
