UK FCA Finalizes Crypto Rules, to Launch Licensing Regime in October 2027

The UK Financial Conduct Authority has finalized a regulatory framework for the broader crypto-asset market and will roll out a full licensing regime starting in 2027.

The Block reported on June 29 that the FCA completed its crypto rulebook, including prudential standards, measures to prevent market abuse and oversight standards for stablecoins. The new regime will take effect on Oct. 25, 2027.

The rules will apply to crypto exchanges, brokers, custodians, stablecoin issuers, crypto lending and borrowing services, staking providers and some decentralized-finance projects with a central operating entity. Trading platforms, in particular, must conduct due diligence on listed assets, satisfy specified standards and publish mandatory disclosure documents for those assets. Existing disclosure exemptions for some crypto assets have been eliminated.

The FCA is also strengthening market-conduct rules. Insider trading and market manipulation will be banned, while large exchanges will face requirements including on-chain monitoring and disclosure of inside information.

For stablecoin issuers, the framework sets standards for reserve-asset management, customer-asset protection, redemption procedures and disclosures. Issuers will be allowed to hold surplus reserve assets of up to 5%.

The regulator also eased some capital requirements after reflecting industry feedback. The own-funds requirement coefficient, or K-SII, for stablecoin issuers was reduced to 1% from 2%.

Crypto firms can apply for FCA authorization from Sept. 30, 2026, through Feb. 28, 2027. Existing firms registered under anti-money laundering rules will not automatically transition to the new regime and must obtain separate approval.

David Geale, the FCA's executive director for payments and digital finance, called the framework a major milestone in providing regulatory clarity for the UK's crypto industry. It will support innovation while strengthening consumer-protection standards, he said. Geale added that crypto investment still carries high risk.