On June 29, Britain’s financial regulator released final rules that establish capital requirements, regulate market abuse and govern stablecoins for crypto-entities, creating what is likely to be one of the most comprehensive national crypto frameworks globally and establishing a reference standard that crypto exchanges, custodians, and issuers operating across borders will need to monitor.
The Financial Conduct Authority’s (FCA’s) package covers trading platforms, dealers, custodians, stablecoin issuers, lending providers and staking activities, with an authorization requirement becoming effective on October 25, 2027, as per the FCA’s final policy statements.
With the industry still grappling with disparate national regulations for cryptocurrencies, the UK is now one of only two places in the world, along with the European Union’s Markets in Crypto Assets Regulation (MiCA), that have an all-encompassing crypto regulation framework.
In stark contrast to previous regulations that focused predominantly on anti-money laundering (AML) regimes or stablecoin regulations, the UK’s regulation framework merges prudential standards, market integrity requirements, and operational risk criteria into one unified regulatory framework. The breadth of this framework places crypto-companies under regulations that now reflect operational expectations that are increasingly similar to those of traditional financial institutions.
FCA makes authorization and capital rules mandatory
Any crypto businesses trying to operate in the UK or serve customers from the UK must submit an FCA application for authorization between 30 September 2026 and 28 February 2027. Existing AML registrations will not automatically roll over into the new regime.
The capital requirement forms the core of the FCA’s approach to crypto regulation. The FCA has introduced a single requirement of 40% of net risk positions for all eligible crypto assets that will be admitted to UK trading platforms. Previously proposed were two different tiers of risk but this has since changed.
The FCA has amended its previous position on the proposed capital coefficient for issuers of stablecoins, which have also achieved a major concession as the FCA has now set the coefficient at 1% instead of 2% after industry conversations regarding the appropriate balance between resilience and market development.
Crypto businesses must also conduct annual stress tests in order to demonstrate to the FCA their ability to absorb significant losses from a severe downturn in the market, as outlined by The Guardian. Unlike the Bank of England, crypto businesses will create their own stress test scenarios and provide the results to the FCA for monitoring and regulatory examination.
UK regulators tighten oversight of crypto market abuse
According to FCA, any crypto asset listed on any UK trading platform authorized by the FCA will be subject to the same regulations that govern insider trading and market manipulation as those that govern listed securities.
Platforms that generate more than £10 million in annual turnover will be required to exchange surveillance data with other trading platforms to increase the likelihood of detecting cross-platform market manipulation.
The FCA also kept two activities as permissible market activities: coin burning, which permanently removes tokens from circulation, and stabilization activities conducted during primary or secondary token offerings.
Baker McKenzie stated that the market abuse rules function as “designated activities” in the sense that the greater obligations apply to the activity that is regulated, not just the FCA-authorized promoter of the activity; consequently, the practical scope of the framework is extended to all crypto markets in the UK.
UK sets a global crypto benchmark beyond MiCA
The timing is important. The European Union is still implementing its MiCA regulation across its members; the United States is still debating its federal crypto legislation, including stablecoin regulations through the GENIUS Act. The UK will become the first major financial market outside of the EU to fully implement a comprehensive crypto regulation with a defined timeline.
As a result of the UK’s leadership on this matter, international firms engaged in crypto activities — including exchanges, custodians and issuers of digital stablecoins — will need compliance programs that comply with both the UK and MiCA’s regulatory requirements, but they should also be able to adapt to any potential future regulations in the US.
While both MiCA and the UK frameworks seek to protect investors and promote stability in the markets, fundamental differences exist between the two in several key areas:
Under MiCA, a firm that is authorized to operate in one country can use its single license to do so in all EU member states. However, firms wishing to serve customers in the UK must obtain their own regulatory authorization from the FCA, and they will be subject to a higher level of ongoing prudential supervision via measures such as annual stress testing, a unified net risk position requirement and increased cross-platform oversight.
In terms of supervision, MiCA aims to promote consistency among the 27 EU member states by establishing a set of standardized regulations in all countries, which the national regulators will implement. The FCA, on the other hand, maintains the UK’s long-established regulatory outcome-focused approach, allowing greater discretion for supervisors to evaluate firms’ risk management and resilience over time. As a result, multinational firms may find themselves subject to a higher degree of ongoing supervisory oversight in the UK compared to the other countries where many of their baseline requirements may coincide with MiCA.
Overall, the above differences between the UK and MiCA suggest that the UK is positioning itself to be less of a parallel system to MiCA than a more prudentially focused framework similar to what other financial sectors have implemented throughout the world.
As a result, firms already compliant with MiCA may have to implement additional governance and risk management controls; greater amounts of ongoing supervisory participation to the level required by the FCA may be implemented and imposed upon them by the FCA and vice versa —as opposed to relying solely on the same compliance programs that they will develop with respect to their obligations under MiCA.
David Geale, FCA Executive Director — Payments and Digital Finance, indicated that this package has two purposes: it is for consumer protection; and it represents a competitive advantage for the UK. “For the first time, we’ve got a comprehensive regulatory framework for crypto in the UK, one that covers how firms trade, how they hold assets, serve consumers and manage risk,” Geale told The Guardian.
What the framework does not change
Investment risks will still exist with the new regulation. The FCA states that investors in crypto should still expect to possibly lose every penny they invest. Dan Coatsworth, head of markets at AJ Bell, said to The Guardian that regulation “provides stronger consumer protection and helps to reduce scams, misleading promotions and losses from poor practices. It can reduce risk but doesn’t remove it completely.”
Baker McKenzie stated they have identified specific categories of foreign businesses that only provide investment services to institutional clients that are not required to be authorized to do business in the UK, but they will put clear limitations on how many of the largest trading volumes will actually be affected by this regulatory structure.
Until the new regulatory framework is completely up and running (October 2027), the FCA’s regulatory responsibilities for crypto are primarily limited to reviewing financial promotions and ensuring compliance with AML regulations.
Pre-application support begins in July 2026, with the authorization window opening in September 2026, providing firms with up to one year to prepare for one of the most comprehensive crypto regulatory initiatives in the world.