UK to Introduce Comprehensive Regulatory Framework for Cryptoassets

HM Treasury has published a draft statutory instrument— the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 —which sets out a new regulatory regime for cryptoassets in the United Kingdom.

This represents a significant development in the UK’s approach to digital assets as it brings a range of crypto-related activities within the scope of financial regulation for the first time.

Under the proposed framework, firms engaging in activities such as dealing, arranging, and advising on cryptoassets will be required to obtain authorisation from the Financial Conduct Authority (FCA). This aligns the regulatory oversight of cryptoasset firms with that of traditional financial services providers.

Specified activities

The draft order introduces several specified activities involving cryptoassets that will now require FCA authorisation, including;

• Issuing Qualifying Stablecoins (Article 9M) – this applies to firms issuing stablecoins used for payments or investments within the UK.
• Custody and Safeguarding Services (Article 9O) – this Covers the provision of custody or safeguarding services for qualifying cryptoassets and certain investment-related cryptoassets.
• Operating a Cryptoasset Trading Platform (Article 9T)- this regulates platforms facilitating the trading of qualifying cryptoassets.
• Dealing as Principal (Article 9U)- this involves buying or selling qualifying cryptoassets on a firm’s own account.
• Dealing as Agent (Article 9X) – this relates to facilitating cryptoasset transactions on behalf of clients.
• Arranging Deals in Cryptoassets (Article 9Z)-  this includes making arrangements for others to buy, sell, or trade qualifying cryptoassets.
• Cryptoasset Staking Services (Article 9Z7)-  this covers the facilitation or management of staking activities.

Authorisation Requirements

The draft order also amends Section 418 of FSMA to clarify when firms must be authorised based on their connection to UK retail clients:

• Issuers of Qualifying Stablecoins must be authorised if operating from a UK establishment.
• Providers of Custody, Safeguarding, and Staking Services must be authorised if serving UK consumers, regardless of their location.
• Other Activities (e.g., trading platforms, dealing, arranging) require authorisation if the firm interacts directly or indirectly with UK retail clients, whether based in the UK or overseas.

Exclusions from the draft order

The draft order excludes several areas from immediate regulation:

• Fiat-backed stablecoin payments will be addressed separately under the Payment Services Regulations 2017.
• Decentralised finance is excluded due to the absence of a central entity capable of being authorised or supervised.
• Market abuse and disclosure frameworks for cryptoassets are not included in this Order but are expected to be introduced in future legislation.

Regime start date

The new regime will extend beyond the current anti-money laundering (AML) registration requirements under the Money Laundering Regulations (MLRs). Firms already registered under the MLRs will need to apply for authorisation to continue conducting in-scope activities. Once authorised, separate AML registration will no longer be required, though firms must continue to comply with AML obligations.

The regime is expected to come into force by the end of 2025. New firms entering the market will need to obtain authorisation prior to commencing regulated activities. Existing firms will be granted a transitional period to apply for authorisation; failure to do so will require them to wind down relevant operations within a specified timeframe.

Expert commentary

Olliers’ Associate Solicitor, James Claughton has said, “Whilst we have undoubtedly been living in a digital age for some time, the fact is that for all the positives of technological advances including  AI and digital assets, amongst others, there is inevitable misuse and abuse of the same and so it is perfectly proper and perhaps overdue for the Government to introduce a regime such as the one proposed. How effective will it actually be, well I suppose, like most things, we will have to wait and see.” 

If your business is under investigation for its use of cryptocurrencies or any other alleged financial irregularities or fraud, Olliers are on hand to provide you with the legal advice and representation you need to successfully navigate the process.