UK Cryptoasset Regulations 2026: What Crypto Firms Need to Know About FCA Authorisation and Compliance
The UK’s updated cryptoasset framework is approaching quickly, leaving businesses with limited time to prepare for compliance. Companies already operating in the UK crypto market should begin preparing their authorisation applications immediately if they intend to submit them to the Financial Conduct Authority between 30 September 2026 and 28 February 2027. Preparing a complete application can easily take three months or longer.
From 11 May 2026, firms have been able to request pre-application support meetings with the FCA, with the first sessions expected to begin in July 2026. One major difficulty for businesses, however, is the uncertainty surrounding the exact scope of the regime. The FCA has only recently launched a consultation on its proposed “Perimeter Guidance,” which is intended to clarify where the boundaries of the new rules will apply. Although the consultation closes on 3 June 2026, the final guidance is not expected until September.
In this Keynote discussion, Financial Services partners Simon Sutcliffe and Simon Deane-Johns examine the consultation and its implications for crypto businesses.
New cryptoasset activities coming under regulation
Under the latest Cryptoasset Regulations, the FCA will gain authority to approve firms conducting specific cryptoasset-related activities connected to:
- qualifying cryptoassets;
- qualifying stablecoins; and
- in safeguarding cases, relevant specified investment cryptoassets.
The list of newly regulated activities includes:
- issuing qualifying stablecoins;
- safeguarding cryptoassets;
- arranging cryptoasset custody or safeguarding services;
- operating a qualifying cryptoasset trading platform (CATP);
- dealing in qualifying cryptoassets as principal;
- dealing in qualifying cryptoassets as agent;
- arranging transactions involving qualifying cryptoassets; and
- arranging cryptoasset staking services.
The FCA’s latest consultation paper outlines how the regulator intends to interpret both the regulated crypto instruments and the activities themselves. It also explains how the FCA will assess:
- whether an activity is carried out “by way of business”;
- whether the activity takes place “in the UK”; and
- whether any exemptions or exclusions could apply.
Businesses already operating within the crypto sector should review their activities carefully before applying for authorisation. In some situations, firms may already have been carrying out regulated activities that required FCA approval under existing financial services rules.
Existing UK crypto regulation
Although many exchange tokens and utility tokens have historically remained outside direct regulation, some cryptoassets share characteristics with traditional financial instruments. As a result, certain cryptoassets may already fall within existing UK financial regulation.
For example:
- security tokens may already be subject to traditional investment regulation; and
- e-money tokens may fall under e-money and payment services legislation.
In addition, the UK already operates a registration regime for certain cryptoasset service providers under anti-money laundering rules. There are also existing restrictions on how cryptoassets and tokens can be promoted or advertised to UK consumers.
However, the upcoming regime introduces important differences, particularly regarding which cryptoassets qualify under the new framework and how newly regulated activities are defined.
The FCA specifically highlights this issue in its consultation paper on the proposed Perimeter Guidance. The regulator strongly advises firms to conduct a thorough legal analysis to determine whether any of their operations fall within the scope of the new rules.
Traditional financial concepts may not apply neatly to crypto
When determining whether a cryptoasset activity is regulated, the FCA will focus on the substance of the activity rather than the terminology used by the market.
Claims of automation or decentralisation may not shield businesses from regulation. Likewise, the use of blockchain or distributed ledger technology does not automatically eliminate the presence of intermediaries.
If an identifiable individual or entity is conducting a regulated activity in or from the UK as part of a business, the activity could still fall within the regulatory framework. Factors such as setting operational parameters, controlling key features, or receiving commercial benefits may all influence the FCA’s assessment.
Risks of operating without authorisation
Conducting regulated cryptoasset activities without proper authorisation can lead to serious consequences. Under UK law, unauthorised regulated activity is a criminal offence that may result in:
- imprisonment for up to two years;
- unlimited financial penalties; or
- both imprisonment and fines.
Additionally, agreements entered into while operating without authorisation may become unenforceable. Even firms that already hold FCA authorisation could face regulatory action if they carry out activities beyond the scope of their existing permissions.
