Do the UK’s Cryptoasset Regulations apply to you?

The UK’s new Cryptoasset Regulations are suddenly upon us. If you are already in the crypto business in the UK, you’ll need to start the process of applying for authorisation now in order to file the application with the Financial Conduct Authority (FCA) between 30 September 2026 and 28 February 2027. It usually takes at least three months to prepare an application. Firms can request a pre-application meeting from 11 May 2026, through the FCA’s pre-application support service, and the meetings will take place from July 2026. A key challenge, however, is that the FCA has only just begun consulting on its ‘Perimeter Guidance’ on where the boundary of the new regime lies. The consultation closes on 3 June 2026, yet the FCA plans to finalise that guidance in September.

In this Keynote, Financial Services partners Simon Sutcliffe and Simon Deane-Johns provide an overview of the consultation.

Newly regulated cryptoasset activities

The latest ‘Cryptoasset Regulations’ enable to the FCA to authorise a firm to carry on one of the newly defined cryptoasset activities in relation to a:

• “qualifying cryptoasset”;
• “qualifying stablecoin”; and/or
• in the case of safeguarding, a “relevant specified investment cryptoasset”.

The newly regulated cryptoasset activities include (among other things):

• issuing qualifying stablecoin;
• safeguarding cryptoassets;
• arranging cryptoasset safeguarding;
• operating a qualifying cryptoasset trading platform (CATP);
• dealing in qualifying cryptoassets as principal;
• dealing in qualifying cryptoassets as agent;
• arranging deals in qualifying cryptoassets;
• arranging qualifying cryptoasset staking.

The latest consultation paper explains the FCA’s proposed interpretation of what constitutes the regulated instruments as well as the new types of regulated activity. The FCA also explains how it considers:

• whether such activities are being conducted ‘by way of business’ and ‘in the UK’; and
• if so, whether certain exclusions might apply.

If you are already active in the cryptoasset sector, you need to be careful when applying for authorisation to carry out one of these newly regulated activities, that you check you have not already been carrying on an existing regulated activity for which you should already have obtained FCA authorisation.

What UK regulation already applies to cryptoassets and related activities?

While ‘exchange tokens’ and ‘utility tokens’ have been largely unregulated, some tokens have the same or similar characteristics to ‘traditional’ regulated instruments. So, if you are dealing with those types of tokens or cryptoassets, you may already be subject to the ‘traditional’ investment regulation (in the case of ‘security tokens’) or the e-money and payment services regime (in the case of ‘e-money tokens’).

There is also an existing registration regime for some types of cryptoasset service provider under the money laundering regulations, as well restrictions on how most types of cryptoasset or token can be advertised or marketed in the UK. However, there are key differences between the current regime in terms of the types of cryptoasset affected by newly regulated activities and the criteria for what constitutes a ‘qualifying’ cryptoasset under the new regime.

The FCA even sounds a clear warning about this problem in the latest consultation paper relating to its proposed ‘Perimeter Guidance’. The FCA also recommends that you make sure you have the correct analysis as to whether you are carrying on any newly regulated activities.

Traditional finance terms often mean something very different for cryptoassets

When considering whether a cryptoasset or related activity is regulated, it’s the substance that counts, not the terms the market uses.

Automation or ‘decentralisation’ may be no defence; and just because a ‘distributed ledger’ or ‘blockchain’ is used does not mean there are no intermediaries present in the end-to-end activity. If any ‘identifiable person’ is carrying on that specified activity by way of business in or from the UK, they could be caught by the regulations. Setting key parameters, controlling an important feature or function, and/or receiving any commercial benefit are all relevant considerations.

Carrying on a regulated activity without authorisation is a criminal offence that carries a term of imprisonment of up to two years, an unlimited fine, or both; and any agreements you entered into would be unenforceable. Even authorised firms that exceed their existing permissions would be in hot water.

If you need advice on any aspect or would like us to make a submission on your behalf, please contact Simon Sutcliffe or Simon Deane-Johns.