In November 2024 the Financial Conduct Authority (FCA) published a roadmap for the UK’s crypto regulation regime. This marks a pivotal moment in the development of a framework that aims to balance consumer protection with fostering innovation.
The FCA's approach to crypto regulation has been shaped by a series of stakeholder roundtables, of which our market leading team were part.
There's been pressure to have clear regulation in the UK for some time, given increased usage together with a growing number of scams and fraud cases relating to crypto investments. FCA research shows that 12% of UK adults now own some form of digital asset, up from 10% in 2022 and 4.4% in 2021. However, this rise in adoption is coupled with a concerning lack of consumer knowledge, with around a third of people believing they could seek recourse or financial protection from the FCA if something went wrong.
The FCA's roadmap will increase consumer protections by laying the groundwork for a comprehensive regulatory framework for digital assets, focusing on areas such as consumer risk management, transparency, fraud prevention, and market abuse.
The roadmap reflects the FCA’s broader ambition to establish the UK as a global leader in crypto. A regime that has clarity and consistency is imperative if UK firms operating in this sector are to be competitive in a global marketplace.
Until now, the UK has had a fragmented regulatory framework for digital assets. The roadmap signals a shift towards a more comprehensive and integrated approach, with the FCA taking a more active role in overseeing the crypto market.
Many other countries are also moving towards more robust oversight of the crypto industry. For example, the EU's Markets in Crypto Assets (MiCA) regulation came fully into effect in December 2024, and the US is working on its own legislative plan – the Financial Innovation and Technology for the 21st Century Act (FIT 21) – with President Trump being explicitly pro-crypto.
The UK’s approach, as outlined in the roadmap, is intended to position the country as a global leader in digital assets and responsible crypto regulation.
A recent decision by HMT in January 2025 to amend the law to exclude cryptocurrency staking from the definition of a collective investment scheme is another good example of how the UK is aiming to be at the forefront of developments in the sector.
In contrast, in the EU, staking service providers are required to be authorised under MiCA. This decision by HMT has been praised by the sector as providing clarity and a move towards driving global innovation and competitiveness.
We're already seeing firms seek advice in moving certain operations out of jurisdictions where they're restricted, focusing on jurisdictions where growth is more likely.
The new regulatory regime is likely to go live towards the end of 2026 given that all policy statements are due be published in that year, and only then will the authorisation gateway open. It should be noted that UK firms can already apply to register with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs).
Once live, firms will need to comply with all FCA rules or risk intervention, such as fines, operating restrictions, or potentially have their authorisation to operate in the UK market removed.
Firms should be proactive and engage with the detail as the discussion papers and consultation papers are published. By feeding back to the FCA there's an opportunity to shape final policy development.
Firms should start reviewing their internal practices, for example, around financial promotions, governance, and risk management procedures to ensure they're ready for the upcoming regulations. They should also be aware of the costs of preparing for this new regulatory regime, both one-off and ongoing, and include these in costs in their cashflow forecasting.
If firms are considering moving their international operations, or part of them, restructuring advice should be sought.
Ultimately, the FCA’s roadmap sets the stage for a more responsible and sustainable future for digital assets in the UK, with clear guidelines that will benefit both businesses and consumers alike.
For more insight and guidance, get in touch with Russell Simpson or Paul Staples.
