UK makes milestone law to regulate cryptoassets

HM Treasury has laid legislation before Parliament which will introduce a regulatory regime for cryptoassets. The new regime will start to apply on 25 October 2027. The latest version makes several changes to an earlier draft. Crypto firms, including those based outside the UK, will need to carefully consider the scope of the new regime and how it will impact their business.

Incoming crypto regime

Earlier this year HMT asked for feedback on its draft law for regulating cryptoassets. The consultation prompted various industry responses.

Now HMT has introduced the final version of the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025. The Government has made a number of significant changes in response to market feedback. This includes clarifying key definitions and introducing new exclusions for some activities.

Next steps

Both Houses of Parliament must approve the Regulations, which should be a formality. This will happen in 2026.

The parts of the Regulations that give powers to the Financial Conduct Authority will come into force first. These enable the FCA to:

• make the rules and guidance which will apply to regulated cryptoasset activities, and

• set up the process for firms to apply for a licence or vary their existing permissions.

The cryptoasset regime will go live in October 2027. Transitional arrangements will allow firms to submit licence applications to the FCA before the regime starts to apply and carry on providing their services while they are being processed.

The FCA is expected to open consultations in the coming days to propose more draft rules for its cryptoasset regime.