UK Crypto Regulation: A New Era for Digital Assets
The United Kingdom is poised to revolutionize its approach to cryptocurrency regulation, with plans to integrate digital assets into the financial services sector by October 2027. This move marks a significant shift away from the current “wait and see” approach, towards a formal framework that closely resembles the regulations governing traditional financial products. The UK Treasury and the Financial Conduct Authority (FCA) have set a target date for the full implementation of the country’s new crypto regime, which aims to promote responsible innovation, strengthen consumer protection, and improve market transparency.
Key Insights
The UK’s new regulatory framework will bring a wide range of crypto activities into the scope of regulated financial services, including operating trading platforms, trading crypto assets, arranging transactions, and providing custody services. The FCA has launched consultations to set standards and requirements for crypto firms, with final rules expected in 2026. The new framework will introduce a detailed licensing system, mirroring traditional financial products, and will require crypto firms to demonstrate strict anti-money laundering controls and adhere to governance standards.
Development of the UK Crypto Regulatory Framework
Until the end of 2025, most crypto activity in the UK was primarily regulated by anti-money laundering (AML) regulations, financial promotion requirements, and guidance from the FCA. However, this approach was not comprehensive, as it did not address consumer protection, capital requirements, or market supervision. The planned regulatory change marks a departure from the previous patchwork approach, with the UK intending to integrate crypto activities into the core area of financial services and align them with the legal standards that apply to traditional financial products.
By the end of 2025, around 50 crypto firms were registered with the FCA for AML purposes, although many applications reportedly fell short of the regulator’s expectations in terms of governance and risk controls. The new framework will provide clarity and certainty for businesses, allowing them to invest, innovate, and create high-skilled jobs in the UK.
The New Roadmap for UK Crypto Policy
In December 2025, the UK government submitted the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 to the UK Parliament for approval. This legal instrument provides the legal basis for bringing a wide range of crypto activities into the scope of regulated financial services in the UK. The regulations expand the list of activities regulated under the Financial Services and Markets Act 2000 (FSMA) to include operating a trading platform for crypto assets, trading crypto assets as a principal or agent, arranging transactions, and providing custody services.
The FCA has launched a series of consultations to translate broad legal powers into practical, enforceable rules. The consultations include proposals for operational requirements for trading platforms and brokers, mandatory controls around staking services and certain DeFi-related activities, and regulatory requirements for token issuers to be more transparent about their projects.
New Restrictions on Political Crypto Donations in the UK
Separate from financial services regulation, UK lawmakers have turned their attention to the treatment of cryptocurrencies in political finance. As of December 2025, crypto donations are not expressly prohibited under UK political finance law. However, the UK government has launched a review of foreign financial interference and examined possible protections in political finance laws, including the use of cryptocurrency donations.
The review may inform future policy recommendations and is expected to be available in March 2026. Ministers and commentators have raised concerns about the traceability of cryptocurrency donations, particularly when pseudonymous wallets could obscure the origins of the funds. Future electoral reform laws could include proposals to restrict political crypto donations, although any changes would require new primary legislation.
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