FCA opens crypto authorization window ahead of 2027 UK regime

What happened

The UK Financial Conduct Authority opened applications on Wednesday for crypto businesses seeking authorization under a regime due to take effect on Oct. 25, 2027. Companies that plan to keep serving UK customers should apply by the end of February 2027, and the FCA expects to decide applications submitted in that window before the regime begins. Existing money laundering registrations will not convert into FCA authorization.

The framework widens FCA supervision beyond anti-money laundering and financial promotion requirements. The regulator finalized its rules in June, including requirements covering stablecoin issuance, crypto trading platforms and market abuse. Trading, staking, custody, transactions, admissions, disclosures, market abuse, financial standards and consumer protection all fall under wider FCA supervision.

Dominic Cashman, the FCA's director of authorization, said the UK's new crypto regime will give consumers greater protections and firms a clear framework to operate in.

Emma Banymandhub, chief executive of payments trade body The Payments Association, said money laundering registration will not carry over and that firms should be realistic about the standards they must meet. She said implementation would matter most for smaller and growing businesses.

Why it matters

Firms that apply during the UK window may keep providing specified cryptoasset services while the FCA reviews their cases. Each applicant must provide enough evidence to show that its business can meet the regulatory requirements, and the FCA will assess consumer protection measures, customer-asset safeguards, market integrity controls and financial resilience.

The process is a fresh start for companies already registered under money laundering rules. Banymandhub said a proportionate authorization process would support consumer protection and market development, including for smaller companies.

Background

The UK is also testing blockchain-based financial services beyond crypto trading. On Sept. 24, UK banks tested tokenized deposits through interbank remortgage and payment trials. In the United States, Federal Reserve stablecoin proposals published last week set out planned reserve, capital, custody and risk-management requirements for supervised payment stablecoin issuers. The CFTC separately updated crypto guidance on Sept. 24 covering tokenized permitted assets and blockchain-based recordkeeping for registered firms.

What is still unclear

• The FCA will judge each applicant on consumer protection measures, customer-asset safeguards, market integrity controls and financial resilience, so the result for individual firms is not known in advance.
• It is not yet clear how smaller and growing businesses will meet the standards, given that existing money laundering registration will not carry over.

Questions readers ask