Do crypto businesses need FCA authorisation?

Where crypto firms stand today

Until the new regime goes live, the main UK requirement for most crypto businesses is registration with the FCA under the Money Laundering Regulations 2017. Registration applies to cryptoasset exchange providers and custodian wallet providers carrying on business in the UK. It is an anti-money laundering regime. The FCA checks the firm’s controls, its owners and its managers, but registration is not authorisation under FSMA and does not bring with it the full set of conduct rules that apply to authorised firms. Carrying on these activities without registration can be a criminal offence.

Some tokens are already within the existing perimeter. A token that has the features of a share, a debt instrument or a unit in a collective investment scheme can be a specified investment, and one that meets the definition of electronic money falls under the Electronic Money Regulations 2011. Activities involving those tokens can need authorisation now, regardless of the new regime.

The new regime

The new regime brings a range of cryptoasset activities within FSMA as regulated activities, so firms carrying them on will need FCA authorisation in the same way as other financial services firms. The FCA’s application period opened on 30 September 2026 and closes on 28 February 2027, and the regime goes live on 25 October 2027. Firms currently registered under the Money Laundering Regulations must apply for authorisation. Their registration does not convert automatically.

Timing matters. The FCA says it expects to decide applications made in the application period before the regime starts. If a firm applied in the period and is still waiting for a decision on 25 October 2027, it can generally keep providing its services until the application is decided. The FCA will not speed up applications made after the period closes, and a firm in that position that is not authorised by 25 October 2027 can generally only carry out existing contracts until its application is decided. A firm that does not apply needs to run off its UK cryptoasset business before the regime starts. The detail depends on the firm’s position and the FCA’s rules, so check the FCA’s gateway guidance.

The new regulated activities include, described in general terms:

• issuing qualifying stablecoins
• operating a trading platform for cryptoassets
• dealing in cryptoassets, whether as principal or as agent
• arranging deals in cryptoassets
• safeguarding cryptoassets for others, sometimes called custody
• staking cryptoassets on behalf of customers

The precise definitions, the exclusions and the territorial reach are in the legislation and the FCA’s rules, and the detail can change how a particular business model is treated. The territorial reach is particularly important for firms based outside the UK that serve UK customers. This list is not a substitute for checking the definitions against what your business actually does.

Businesses that touch crypto without being crypto firms

Many businesses are close to crypto without being exchanges or custodians. Software developers building wallets, analytics or trading tools, payment firms that convert crypto to fiat for merchants, merchants that accept crypto, and businesses that run validators or nodes all raise questions about where the line falls. The distinction between providing technology and carrying on a regulated activity for customers is central, much as it is for other fintech businesses. Whether a wallet is non-custodial, who controls private keys and who the customer contracts with are typical factors. Fintech software and platforms

Crypto promotions are already regulated

The marketing test applies now, ahead of the new regime. Since 8 October 2023 promotions of qualifying cryptoassets have been within the financial promotion regime under section 21 of FSMA. A promotion must be communicated or approved by an authorised firm with the right permission, be communicated by a cryptoasset business registered with the FCA under the Money Laundering Regulations, or fall within an exemption. The FCA’s rules for these promotions, in COBS 4, include risk warnings, a 24-hour cooling-off period for first-time investors with a firm and a ban on incentives to invest.

Section 21 applies to communications capable of having an effect in the UK, so overseas firms marketing to UK consumers are not outside it simply because they are based abroad. Promotions through social media, influencers and affiliates are covered by FCA guidance FG24/1, published in March 2024. How the financial promotion rules work and overseas firms

Getting help with authorisation

If your business is likely to be within the new regime, the application is a significant project. Our sister site Crypto Reg covers cryptoasset authorisation in more detail, and we can introduce you to specialists who help firms prepare their applications. The firms we introduce you to pay us an introduction fee.

Common misunderstandings

When a written opinion helps

A written legal opinion is worth considering when you need to know whether your business will need authorisation under the new regime, when a token’s features suggest it may already be a specified investment or e-money, when a bank or payment partner asks about your status, or when you provide technology to crypto firms and want to show you are not carrying on their activities. The opinion applies the definitions to your actual product and customer journey. How written opinions work