tl;dr
The UK Treasury published draft legislation on April 29 to regulate crypto services including stablecoins, staking, custody, and trading platforms under the Financial Conduct Authority (FCA). This is part of the government’s "Plan for Change" to align crypto regulations with traditional financial se...
The UK Treasury has unveiled draft legislation aimed at regulating crypto services such as stablecoins, staking, and custody, under the supervision of the Financial Conduct Authority (FCA). This initiative, part of the government’s “Plan for Change,” seeks to align crypto regulation with traditional financial services standards to foster innovation and enhance investor confidence.
The proposed Financial Services and Markets Act 2000 (Amendment) Order 2025 introduces a new category named “qualifying cryptoassets,” requiring firms engaging in crypto activities to obtain FCA authorization to operate or serve UK clients. Key regulated activities include issuing stablecoins, custody, operating trading platforms, dealing in crypto as principal or agent, arranging crypto transactions, and providing staking services. Notably, stablecoins used for payments remain excluded from Payment Services Regulations for the time being.
The legislation applies universally to firms serving UK consumers, regardless of their physical location, while truly decentralized finance (DeFi) operations without identifiable control are exempt from authorization. Additionally, stablecoin issuers must obtain authorization only if they have establishments within the UK.
Amendments will harmonize the regulation of financial promotions, enabling authorized crypto firms to approve their own promotional materials. This change aligns crypto promotional practices with traditional financial services. Furthermore, the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 will be updated to remove the need for separate anti-money laundering registration, though full compliance with AML requirements remains mandatory.
Firms falling under the new regime must notify the FCA when they commence or cease regulated activities. A transition period will allow existing firms to apply for authorization, while those failing to comply within this timeframe will enter a two-year wind-down phase, permitting them to maintain existing contracts but prohibiting new UK consumer business.
The final legislation is anticipated shortly, with continued fintech collaboration efforts ongoing, including discussions with US regulators on cross-border digital securities cooperation. Chancellor Rachel Reeves emphasized that these measures aim to position Britain as a global leader in crypto innovation while safeguarding investors and market integrity.