UK adds new exclusions to cryptoasset regime

The Government has laid legislation to amend the perimeter of the UK’s cryptoasset regulatory regime following a consultation earlier this year. The changes confirm key carve-outs for prop traders and transactions relating to UK-issued qualifying stablecoins.

Amendment Regulations

The Cryptoasset Regulations 2026 set the UK’s regulatory framework for qualifying cryptoassets, including stablecoins. Now HM Treasury has laid the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026 before Parliament. Once made law these Amendment Regulations will make changes to the Cryptoasset Regulations and related legislation.

New exclusions

The Amendment Regulations introduce several exclusions:

Some of the exclusions have been redrafted since HMT’s consultation in April 2026. For example, the proprietary trading exclusion now applies only where it is not for the purpose of providing a service to another person, or where the firm acts as market maker on a QCATP.

Some of the exclusions also have conditions attached to them. For example, the technical services exclusion is only available if the service provider is neither an authorised person nor a payment service provider. It also requires the underlying platform/service to be either authorised or exempt, or a decentralised protocol.

Other changes

The Amendment Regulations also updates the Financial Promotions Order and Regulated Activities Order.

For example, issuing qualifying stablecoin is added as a new controlled activity for the purposes of the financial promotion restriction. The regime is also updated to reflect the new exclusions, except for the exclusion for technical service providers, meaning that TSPs remain subject to the financial promotions regime.

The RAO is amended to exclude backing assets held in relation to a UK qualifying stablecoin from the regulated activity of safeguarding and administering investments.

The Amendment Regulations also bring forward the commencement of provisions that are already in the Cryptoasset Regulations. These provide that assets backing qualifying stablecoins are not treated as collective investment schemes, alternative investment funds or electronic money.

Next steps

The Amendment Regulations 2026 will be formally approved by both Houses of Parliament before being made law. The cryptoasset regulatory regime will start to apply on 25 October 2027.

The Financial Conduct Authority will start receiving applications for cryptoasset licences and variations of permission from 30 September 2026. Before then, the FCA is also expected to finalise its perimeter guidance (PERG) for regulated cryptoasset activities. This guidance will need updating to reflect the legislative changes made by the Amendment Regulations.