- The UK Treasury plans to regulate cryptocurrency firms under the Financial Conduct Authority (FCA), extending beyond anti-money laundering (AML) rules.
- New legislation will require crypto companies to meet transparency, consumer protection, and governance standards similar to traditional financial products.
- The regulation is expected to be introduced by October 2027 as part of broader reforms to address fraud and regulatory gaps in digital finance.
- Crypto startups will face increased compliance costs and complexity, needing to balance innovation with regulatory demands.
- The changes could reposition crypto firms within the UK’s mainstream financial regulatory framework, but may also challenge early-stage companies’ capacity to operate locally.
The UK Treasury is preparing legislation to bring cryptocurrency companies fully under the country’s financial regulatory framework. This change intends to expand oversight beyond current anti-money laundering (AML) controls and place crypto services within the scope of the Financial Conduct Authority (FCA). The proposals aim to treat firms providing crypto services like other financial products, enforcing standards related to transparency, consumer protection, and market conduct, according to a report.
At present, crypto firms in the UK are primarily regulated through AML registration with the FCA, which focuses on financial crime prevention activities such as customer due diligence and transaction monitoring. The new legislation, expected to be introduced by October 2027, will broaden regulatory requirements to include product disclosures, governance protocols, and investor protections, moving crypto firms into the mainstream regulatory perimeter. This initiative is part of wider efforts aiming to close gaps in regulation and mitigate fraud risks as cryptocurrencies integrate more with conventional finance.
City Minister Lucy Rigby stated the regulations would be proportionate and supportive of growth while protecting consumers. The government has also proposed tougher AML standards recently, including clearer responsibilities for senior management and compliance systems, framed as enhancements to the existing AML framework rather than full market oversight reform. Political concerns, such as transparency in crypto-related political donations, have also contributed to calls for regulatory reform.
Experts note that this shift will require crypto startups to comply with increased operational, governance, and consumer outcome requirements from the outset. “Full FCA regulation effectively moves crypto into the same bucket as traditional financial services from day one,” explained Cessiah Lopez from Solana’s Superteam UK. This change will likely increase costs and complicate compliance processes, especially for early-stage companies, potentially making the UK a less attractive launch point for crypto ventures unless they are sufficiently funded and regulatory-ready.
Conrad Young, co-founder of Paragon, described it as a significant move from policing the edges of crypto towards regulating the actual operation of these businesses. While the new regime may add complexity, it also promises clearer rules and enhanced credibility for the industry. The regulations aim to balance innovation with integrated financial oversight, reflecting the growing importance of crypto in the digital economy.
See related updates and developments on this topic through the Reuters and Financial Times.
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