UK cryptoasset regime

The UK cryptoasset regime is the framework that brings cryptoasset activities and stablecoin issuance in the United Kingdom inside the authorisation system of the Financial Services and Markets Act 2000. It rests on the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (SI 2026/102), made on 4 February 2026, which specify new regulated activities including issuing a qualifying stablecoin, safeguarding cryptoassets, operating a trading platform, dealing, arranging deals and arranging staking. The Regulations come into force in full on 25 October 2027.¹ On 30 June 2026 the Financial Conduct Authority (FCA) published its final rules in a package of policy statements, and on 22 June 2026 the Bank of England published its policy for systemic sterling stablecoins, which replaced proposed per-coin holding limits with a temporary issuance limit of £40 billion per coin.²³ Until the regime starts, FCA oversight of crypto is limited to financial promotions and anti-money laundering controls.⁴

BackgroundReport an error

Money laundering registration

Before the new regime, the main requirement on UK cryptoasset businesses came from anti-money laundering law. The FCA became the supervisor of UK cryptoasset businesses under the Money Laundering Regulations on 10 January 2020, and businesses providing in-scope services must register with it before starting them.⁵ Firms that were already trading had to register by 10 January 2021. The FCA set up a temporary registration regime under which firms that applied before 16 December 2020 and were still awaiting a decision could keep trading until 9 July 2021.⁶ The FCA states that its responsibility under this regime is limited to anti-money laundering registration, supervision and enforcement, and that registration does not give customers access to the Financial Ombudsman Service or the Financial Services Compensation Scheme.⁷

FCA figures as at 1 October 2026 record 427 applications received since January 2020 and 393 determined, of which 68 (17%) were registered, 265 (67%) withdrawn, 46 (12%) rejected and 14 (4%) refused.⁵

Financial promotions

HM Treasury brought promotions of qualifying cryptoassets into the existing financial promotions regime through the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023.⁸ The FCA published its rules in PS23/6 on cryptoasset financial promotions, categorising cryptoassets as Restricted Mass Market Investments, and the legislation entered into force on 8 October 2023.⁹ A promotion must be made or approved by an authorised person, or fall within an exemption or the route open to FCA-registered cryptoasset businesses. A promotion outside those routes breaches section 21 of the Act, which is a criminal offence punishable by up to two years' imprisonment, a fine, or both.⁹

Legislative historyReport an error

Financial Services and Markets Act 2023

The Financial Services and Markets Act 2023 received Royal Assent on 29 June 2023. HM Treasury described it as containing powers confirming the government's ability to specify cryptoasset activities in the Regulated Activities Order and to designate activities under the designated activities regime, and as providing the powers needed for a regime for digital settlement assets used in payments.⁸ Section 69 of the Act amended the 2000 Act to insert a definition of "cryptoasset" in section 417 and extended the financial promotion and regulated activity provisions to assets that are or represent cryptoassets.¹⁰ The 2023 Act also expanded the Bank of England's remit under the Banking Act 2009 to cover digital settlement assets, including systemic stablecoins.³

HM Treasury consultations

HM Treasury published a consultation on the future regulatory framework for cryptoassets in February 2023 and a response in October 2023. It received 131 responses, and about 80% were broadly supportive of the government's approach. Of the respondents who answered the question on legislative approach, 94% agreed or were generally in favour of bringing cryptoassets within the framework of the 2000 Act rather than creating a separate regime.⁸

In April 2025 the Treasury published a draft order, the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, with a policy note.¹¹ The final instrument took the form of regulations rather than an order.

The Cryptoassets Regulations 2026

The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 are SI 2026/102, made on 4 February 2026 and extending to England and Wales, Scotland and Northern Ireland. Regulation 1 sets 25 October 2027 as the "full commencement day". About three weeks after they were made, the Regulations came into force for limited purposes: letting the FCA make rules, give guidance and take preparatory steps, and letting applications for permission be made and determined.¹

ProvisionsReport an error

Regulated activities

The Regulations amend the Regulated Activities Order to add a new Chapter 2B on cryptoassets. According to the explanatory note, the new regulated activities are issuing qualifying stablecoin, safeguarding certain cryptoassets, operating cryptoasset trading platforms, dealing in cryptoassets as principal or as agent, arranging deals in cryptoassets, and cryptoasset staking, and carrying them on requires authorisation under Part 4A of the 2000 Act.¹ The Regulations also create designated activity regimes for public offers and admissions to trading, and for market abuse, and extend the financial promotion regime to the new activities.¹

Article numbers are those in the text of the Regulations as made.¹

Stablecoin issuance

A person issues a qualifying stablecoin under article 9M if it offers the coin for sale or subscription from an establishment in the United Kingdom, the coin was created by it or a member of its group, and it carries on from a UK establishment both the undertaking to redeem the coin and the holding of assets to maintain its stable value. The article excludes minting itself from the offering limb.¹

The FCA's final rules for non-systemic issuers are in PS26/10, published in June 2026. They cover issuance, backing assets, redemption, safeguarding and disclosures, and the FCA states they are intended to set a baseline for stablecoin issuance.¹² Main features are as follows.

• Backing assets. Issuers may hold core backing assets, consisting of short-term deposits and short-term government debt, and may use an expanded range of assets if they notify the FCA and meet further conditions. Issuers must hold at least 5% of the backing pool in on-demand deposits, and issuers using expanded assets must meet a backing asset composition requirement, calculated on every redemption day. After consultation the FCA removed the forward-looking estimate of daily redemptions from that calculation.¹²
• Statutory trust. The backing asset pool must be held on statutory trust for the benefit of holders.¹²
• Redemption. Holders may redeem at par. The final rules require a payment order within one business day (T+1), with the clock starting when the issuer receives the coin in its wallet, so that anti-money laundering checks happen before it starts.¹²
• Interest. Issuers may not pass interest or income from the backing pool to holders. The FCA's rules do not prohibit third parties from paying rewards to their own customers from their own account, provided no interest or income from the backing pool is passed on.¹²

The FCA's prudential rules for stablecoin issuers are in PS26/12, where the operational risk K-factor requirement for stablecoin issuance was reduced from 2% to 1% after consultation.¹³

Custody, trading platforms, intermediaries, lending and staking

PS26/11 sets the FCA's final rules for the other regulated activities: operating a qualifying cryptoasset trading platform, dealing, arranging, lending and borrowing, staking, safeguarding and an approach to decentralised finance.¹⁴ The main points are these.

• Trading platforms and intermediaries. Principal dealers were removed from the pre-trade transparency requirements. On best execution, firms should check prices from at least three reliable UK authorised execution venues where possible, but need not execute on them.¹⁴ A firm operating a platform in the United Kingdom, or from overseas for UK consumers, needs FCA authorisation as a platform operator.¹⁴
• Custody. Safeguarding is subject to the FCA's client assets rules in CASS 17, adjusted for cryptoasset custody.¹⁴²
• Lending and borrowing. These are not separate regulated activities. The FCA states that firms offering them may be carrying on dealing or arranging activities, and the rules apply when retail clients are involved. They include information requirements, express consent, appropriateness testing, extra record-keeping, and a ban on proprietary tokens in services to retail clients. The FCA notes that in cryptoasset lending the assets become the property of the recipient.¹⁴
• Staking. The regulated activity is making arrangements on behalf of another person for qualifying cryptoasset staking, defined as the use of a qualifying cryptoasset in blockchain validation, including proof-of-stake consensus.¹ The FCA's rules concentrate on retail understanding, with information and express consent before staking.¹⁴
• Decentralised finance. The FCA states that it intends to apply its rules where there is an identifiable controlling entity, with separate guidance to follow on assessing decentralisation.¹⁴

Further statements in the package are PS26/9 on admissions, disclosures and market abuse, and PS26/13 on how the wider FCA Handbook, including the Consumer Duty, applies to cryptoasset firms. A cost benefit analysis was published with them.² On 16 September 2026 the FCA published PS26/18 on perimeter guidance, which states that existing registrations and permissions will not convert automatically.¹⁵

Bank of England and systemic stablecoinsReport an error

Division of responsibility

The Bank of England states that within the United Kingdom regime the FCA regulates the issuance, custody and admission to trading of UK-issued qualifying stablecoins, and will in future regulate their use in payments. Systemic stablecoins, meaning those widely used in payments that may pose risks to financial stability, are regulated jointly by the Bank and the FCA once recognised by HM Treasury.³ The Treasury recognises systemic issuers after consulting the FCA, the Bank, the Payment Systems Regulator and, where relevant, the Prudential Regulation Authority.¹² A firm may be systemic at launch or start under FCA-only regulation and move later to joint regulation.¹²

The Bank and the FCA published a joint approach document on 30 June 2026. According to the Bank's page for the document, the Bank leads on areas including backing assets, capital and reserves, safeguarding, failure arrangements and the temporary issuance guardrail, while the FCA leads on areas such as the Consumer Duty, conduct of business, financial crime and the Senior Managers and Certification Regime, and the two coordinate on operational resilience, governance and outsourcing.¹⁶ The FCA described the document as explaining how responsibilities would be split and how issuers may move from FCA supervision to joint regulation.¹⁷

November 2025 consultation

The Bank published its consultation paper on 10 November 2025. It proposed per-coin holding limits of £20,000 for individuals and £10 million for businesses, with possible exemptions for businesses.¹⁸ The June 2026 policy statement records that the paper also proposed backing assets of 60% short-term UK government debt and 40% unremunerated deposits at the Bank.³

Policy statement of 22 June 2026

The policy statement, titled Sterling-denominated systemic stablecoins, was published on 22 June 2026 together with a consultation on a draft Code of Practice.³ Its main decisions were these.

• Holding limits dropped. The Bank concluded that holding limits were not justified as a proportionate or effective way to manage risks to credit provision, citing the operational challenges and costs respondents described. It replaced them with a temporary guardrail on issuance per systemic stablecoin, set initially at £40 billion.³
• Calibration. The Bank states it used the same analytical approach as for the holding limits, so the guardrail should give the same protection against risks to credit provision. It compares the figure with daily Faster Payments and card scheme volumes of about £1.4 to £2.2 billion and says it is around 10% of average daily values processed by CHAPS. It says the £40 billion figure should not be read as the point at which the Treasury would recognise an issuer as systemic.³
• Review. The Bank expects to loosen and ultimately remove the guardrail once it is satisfied the risk to credit provision has been mitigated.³
• Backing assets. The mix was revised to 70% short-term UK government debt and 30% unremunerated Bank deposits in steady state. Issuers recognised as systemic at launch may hold up to 95% in government debt as they scale. Commercial bank deposits are not permitted as backing assets.³
• Other terms. Issuers may not pay interest to coin holders. Capital is the higher of six months of operating expenses or the cost of the recovery and orderly wind-down plan. Redemption is to be in real time or by end of day, defined as 24 hours from receipt of a full request.³
• Central bank liquidity facility. The Bank intends to publish design details of a liquidity backstop for systemic issuers in 2027.³

The consultation on the draft Code of Practice closed on 22 September 2026. The Bank intends to finalise the Code by the end of 2026, and to consult on further supporting materials in 2027.³ This article found no final Code of Practice as of October 2026.

ImplementationReport an error

The FCA states that its authorisation gateway opened on 30 September 2026 and closes on 28 February 2027, and that the regime starts on 25 October 2027.⁴ The FCA's overview page says firms that apply within the window may be able to continue certain activities while the application is assessed.² The Regulations include a transitional pathway for existing businesses.¹ The FCA also stated that a consultation on resolution for cryptoasset firms and on financial crime guidance was planned for later in 2026.²

The Bank's Code of Practice applies only to issuers that HM Treasury has recognised as systemic.³ This article found no report of such a recognition as of October 2026.

CriticismReport an error

Holding limits and pace

When the Bank proposed holding limits in November 2025, crypto firms and trade groups argued they would be hard to police and could hold back innovation, noting that stablecoins move freely on secondary markets. They also objected to the 40% unremunerated deposit requirement. The Block reported that Stand With Crypto UK's director said almost 85,000 people had signed a petition.¹⁹ The Bank's own policy statement records the main objections: significant operational concerns, a risk of pushing issuance to non-sterling stablecoins, investment not being justified for a temporary tool, and a business limit seen as too restrictive.³

The House of Lords Financial Services Regulation Committee reported on 3 June 2026 in Stablecoins: waiting for regulation. It recommended that the Bank not introduce holding limits in advance, and said the caps would be commercially damaging and hard to enforce. It also criticised the 40% unremunerated deposit proposal and asked the FCA to reconsider its K-factor requirement for stablecoins. Its chair, Baroness Noakes, was reported as saying the United Kingdom was lagging the United States and the European Union but was "now moving in the right direction".²⁰ The Bank's policy statement says its approach responds to the committee's recommendations on pre-committed timelines.³

After the policy statement, Katie Harries of Coinbase said the rules "deliver among the strongest stablecoin regimes in the world", but questioned how long the "temporary" issuance cap would last and said the United Kingdom was the only country capping issuance of stablecoins in its own currency. She also asked whether stablecoins could be used for settlement in core wholesale markets.²¹

In consultation on the FCA rules, a large share of respondents disagreed with parts of the proposals. For backing asset composition, 43% of respondents to the question did not support the proposal, and for the T+1 redemption requirement 48% did not. The FCA responded by simplifying the first and changing the start of the redemption clock, as described above.¹²

The Bank's stated concerns

The Bank states that it continues to believe there are risks to credit provision from large, rapid outflows of bank deposits into stablecoins, and that the guardrail is a transitional measure. It acknowledges that the guardrail brings a new risk of a coin trading above par if demand exceeds supply, which it considers manageable. It also notes that holding government debt as backing creates an interdependency with the gilt market, because an issuer facing rapid redemptions might have to sell assets at a discount.³ Sarah Breeden, a Deputy Governor, told the Lords committee in March 2026 that the Bank was "genuinely open to other ways of achieving the objective", and that enforcing temporary caps required systems whose cost had to be justified.¹⁹

The Bank also rejected industry calls to broaden eligible backing assets to commercial bank deposits and money market funds, citing financial and operational risks, and rejected remuneration of Bank deposits, on the ground that stablecoins used as payment instruments are not involved in monetary policy transmission.³ The FCA likewise declined to add low volatility money market funds to its backing assets, saying they could increase the volatility of the backing pool.¹²

Comparison with other jurisdictions

The FCA says its ban on passing backing asset income to holders is in line with the approach in the European Union and the United States.¹² The Lords committee, as reported, noted that no other jurisdiction imposed holding limits of the kind first proposed, and Coinbase made the comparison about issuance caps noted above.²⁰²¹ For the United States, see the GENIUS Act.

TimelineReport an error

See alsoReport an error

• Stablecoin, the general article and list of stablecoins
• GENIUS Act, the United States federal stablecoin law
• MiCA, the European Union's crypto-asset regulation

ReferencesReport an error