The FCA's Crypto Clock Is Running, and Old Registrations Won't Stop It

The Financial Conduct Authority (FCA) in the United Kingdom has begun the process of regulating crypto assets, marking a significant shift in the country's stance on digital currencies. Firms operating in the UK must apply for authorization by February 28, 2027, and the new rules will take effect on October 25, 2027. The framework covers firms facilitating crypto trading, transactions, staking, and the custody of digital assets, imposing substantive rules on admissions, disclosures, market abuse, prudential standards, and consumer protection.

Existing firms will not automatically receive authorization under the new regime; they must demonstrate compliance with various requirements, including consumer protection, safeguarding customer assets, market integrity, and financial resilience. This distinction carries legal weight, as the Money Laundering Regulations and the new authorization regime serve different purposes.

Existing firms must treat the application process as a fresh authorization exercise and not rely on their past registration under the Money Laundering Regulations.

The FCA has introduced a transitional arrangement, allowing firms applying within a specific window to continue providing certain cryptoasset services while their applications are assessed, provided they meet the transitional conditions. However, firms must satisfy these conditions to be eligible for the transitional protection. The deadline of February 28, 2027, is the most significant deadline for firms to prepare their applications and ensure compliance with the new framework.