FCA regime for cryptoasset regulation: what firms need to know
The Financial Conduct Authority (FCA) is finalising its regulatory framework for firms offering financial services related to cryptoassets. After a period of anticipation, the FCA has released clearer guidance and set out the timeline for firms to comply.
What is the cryptoasset regulation regime?
In 2023, the government announced plans to regulate cryptoassets through the introduction of rules that will require firms providing cryptoasset services to be authorised and supervised by the FCA.
Currently, the legislation to implement this regime is before Parliament, and, if passed, cryptoassets will become subject to formal regulation under the Financial Services and Markets Act 2000.
The new regulatory framework will begin on 25 October 2027, and any firms providing any new cryptoasset services will require authorisation from the FCA under FSMA (The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025).
When will the new requirements come into effect?
The new regulatory requirements will come into force on 25 October 2027 and, while this may seem some time away, firms should be looking at taking action now to ensure they are prepared and aware of how the new regulations will affect them. From this date, any firm operating without FCA approval will be committing a criminal offence if they continue trading. While there are certain exceptions, the regulations will apply to most businesses in the sector.
How does the application process for FCA authorisation work?
The FCA have stated that the application window for obtaining authorisation opens on 30 September 2026 and closes on 28 February 2027. Given that the authorisation process can take up to six months, the FCA strongly advises firms to apply as early as possible. Applications will be reviewed on a first-come, first-served basis, and there is no guarantee that those submitted by the deadline will be approved before the new rules take effect.
What can firms do for now?
Firms should review the draft rules and requirements as soon as possible. While these have not been formally finalised, no significant changes are anticipated. Understanding how these regulations will affect your business is essential, so it is important to read through the materials thoroughly and begin preparing a comprehensive business plan. The FCA will release the full application pack and guidance in due course.
In summary, with the FCA’s new cryptoasset regime imminent, timely preparation is vital. Firms must act now to ensure compliance, avoid operational disruptions and continue trading legally under the updated framework.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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