UK Cryptoasset Regulatory Regime – Major Progress

(5 minute read)

Key Takeaways:

• Important developments for the UK's cryptoasset regulatory regime land in December 2025 and January 2026.
• December 2025: the UK Government put forward the UK's enabling legislation for a cryptoasset regulatory framework.  The UK's cryptoasset regulatory regime is scheduled to go live on 25 October 2027.
• December 2025: the Financial Conduct Authority (FCA) published three consultation papers (CPs) setting out the more detailed regulatory rules for the UK's proposed cryptoassets regime.  Feedback is due by 12 February 2026.

1. CP25/40: Regulating cryptoasset activities – covering conduct obligations for cryptoasset trading platforms (CATPs), intermediaries, lending/borrowing, staking, and decentralised finance (DeFi);
2. CP25/41: Regulating cryptoassets: Admissions & disclosures and market abuse regime for cryptoassets – setting out an admissions and disclosures (A&D) framework with a tailored market abuse regime for cryptoassets (MARC); and
3. CP25/42: A prudential regime for cryptoasset firms – establishing prudential standards for CATPs and intermediaries.

• January 2026: the FCA published Cryptoassets: The transitional provision | FCA. The updated website contains overview content to help those new to UK regulation, and details the cryptoasset licence application process (pencilled to open September 2026), as well as saving and transitional provisions.
• Further FCA consultations are expected in Q1 2026.
• See www.ashurst.com/digitalassets for our previous updates.

CP25/40: Need to know

Trading platforms

The FCA refines location and structure expectations: CATPs facing UK consumers should be authorised in the UK and have a UK legal entity, with potential subsidiary/branch combinations to access global liquidity.

UK retail investors can only access cryptoassets admitted to trading on a UK CATP and supported by a Qualifying Cryptoasset Disclosure Document (QCDD) (see below). UK-issued qualifying stablecoins rely on a different type of QCDD and need not be admitted to a UK CATP to be accessible to retail investors.

CATP operators must implement fair and non-discretionary rules, proportionate algorithmic-trading controls (moving away from full MAR 7A/RTS 6 transposition), and disclose market-maker programmes and incentives. 

Pre-trade transparency obligations will apply only to UK CATPs with annual revenue greater than £10m and firms may set waiver policies. Post-trade transparency obligations will apply to all UK CATPs and firms may set deferral policies. No systematic FCA transaction reporting will apply; instead, all UK CATPs should keep client order/transaction records for five years and report order execution to clients (on a T+0 basis).

On conflicts, the FCA has decided to permit CATP operators to conduct matched principal trading on-platform and principal dealing off-platform within the same legal entity. Affiliated entities can also trade on the platform. In all cases, access will be subject to limitations, compliance with licensing rules, and robust conflicts controls. The FCA has also dropped its proposed ban on CATPs issuing tokens/admitting tokens in which they have an interest, relying instead on A&D/MARC and SYSC 10/Principle 8 to manage conflicts.

Intermediaries

Best-execution remains aligned with COBS 11.2A, with total consideration being the key factor for retail clients. The FCA clarifies its expectation for firms to check at least three reliable UK price sources: (a) constitutes policy-level guidance not a per-transaction test; and (b) does not apply to certain aspects of staking, lending/borrowing, or stablecoin operation.

Orders for UK retail clients must execute on UK-authorised venues and relate to assets with a QCDD, subject to narrow exemptions (e.g. UK-issued qualifying stablecoins).

Payment for Order Flow (PFOF) will be restricted (as was originally planned). Conflicts of interest, including those that arise from the firm's proprietary trading activity, continue to be a priority area; other FCA CPs are relevant here, including on SYSC 10 (CP25/36) and A&D/MARC (CP25/41).

Pre- and post-trade obligations will apply to firms dealing as principal, mirroring rules for CATPs (including the size threshold for pre-trade transparency - see above). Intermediaries must follow the same transaction and client reporting approach noted above.

Firms may be able to choose whether they internalise settlement or arrange it externally, but must mitigate settlement risk (the FCA will consult in 2026).

Lending and borrowing

The FCA now permits retail investor access to lending/borrowing services. Firms must: provide enhanced client information; obtain express consent for key terms; perform appropriateness testing; over-collateralise; obtain client consent for and cap collateral top-ups; implement appropriate LTV/margin/liquidation modelling; and provide negative balance protection. Nonetheless, firms are prohibited from using proprietary tokens.

The FCA will no longer apply consumer-credit-style creditworthiness requirements. 

Staking

Firms must provide clear information, and obtain express client consent, on key terms.

The FCA has dropped mandatory client compensation for operational/technological failures, replacing it with operational-resilience and new record-keeping expectations on firms.

Safeguarding rules will apply where a regulated staking firm safeguards staked cryptoassets.

DeFi

The same outcomes apply to DeFi with an identifiable controller as to centralised finance. The FCA will publish guidance on central control indicators and expectations on financial-crime and operational-resilience mitigants (see below).

CP25/41: Need to know

A&D

CATPs must set and publish risk-based admission criteria, conduct due diligence, and admit qualifying cryptoassets only where a QCDD is prepared and published (subject to narrow exemptions).

QCDDs must be filed on an FCA central repository (such as the NSM). In addition to statutory QCDD content, the FCA will impose outcomes-based disclosure rules on CATPs and responsible persons, and empower CATPs to set their own disclosure rules. Tailored provisions on consumer understanding (drawn from the Consumer Duty) will form part of A&D rules.

Issuers of UK-issued qualifying stablecoins (but not other qualifying stablecoins) are subject to separate A&D requirements. They must prepare, maintain, and regularly update website disclosures and a QCDD aligned to the CP25/14 proposals.

MARC

MARC requires CATPs and intermediaries to implement proportionate systems and controls to prevent, detect, and disrupt market abuse, including: timely disclosure of inside information, maintenance of insider lists, and - for large CATPs - on-chain monitoring and cross-platform information sharing.

Consistent with the current MAR approach, MARC will apply regardless of where the potential market abuse activity occurs (whether in the UK or overseas).

CP25/42: Need to know

Prudential

The FCA will extend CRYPTOPRU/COREPRU to CATPs, intermediaries, lending/borrowing and staking, with own-funds, liquidity and orderly wind-down expectations.

These rules are closely based on the requirements in MIFIDPRU. Where a firm is subject to CRYPTOPRU and MIFIDPRU, it may be required to calculate requirements under both frameworks, although firms should not be required to recognise the same economic exposure to a cryptoasset twice.

Firms will need to conduct a prudential risk assessment on an ongoing basis, similar to the internal capital adequacy and risk assessment (ICARA) in chapter 7 of MIFIDPRU.

The FCA will introduce a tailored public disclosure framework to ensure transparency around firms' prudential positions and risk management practices.

A New Regime for Cryptoasset Regulation: Need to know 

The New Regime publication on the FCA's website contains a number of resources to assist applicants which are new to FCA regulation. For example, general information on the FCA's Standards, Principles for Business and Consumer Duty. 

The Gateway

The publication also includes gateway application details. There are no grandfathering provisions; firms currently registered and/ or authorised under money laundering, payment services or electronic money regulations will need to apply. Firms with existing FCA authorisation will need to apply for additional permissions. And cryptoasset firms currently using another FCA authorised firm to approve their financial promotions will need apply. The FCA will be running information sessions for potential applicants and also offers pre-application support. 

The FCA provisionally expects to open the window for applications in September 2026, and there will be an (as yet unspecified) application period. The FCA expects to determine applications made during the application period before the new regime goes live. If the FCA does not meet this timeline, the firm will be able to provide cryptoasset services until its application is determined. If a firm's application made outside the application period has not been determined when the new regime goes live, that firm will enter the transitional provision (see below) until its application is determined.

Transitional Provision

Transitional arrangements will apply to certain cryptoasset firms, such as firms which apply and are unsuccessful or withdraw their application before the new regime goes live, and firms which apply outside the application period and the application is still pending at the go-live date. The transitional provision will permit them to run-off existing business (for up to a maximum of 2 years) but not to conduct new business.

The transitional arrangements will not be available to firms which do not apply or are deemed to have not applied. Non-transition firms will need to complete an orderly run-off before the new regime is live.

Next steps

In Q1 2026 the FCA will consult on the following cryptoasset topics:

• guidance on international location policy; 
• Consumer Duty;
• broader COBS rules;
• complaints/redress and access to the Financial Ombudsman Service;
• settlement-related guidance and rules for CATPs and intermediaries;
• cryptoasset safeguarding rules (including for staking firms); and
• guidance on DeFi.

The new regime's timetable enables applicants for cryptoasset permissions to begin preparations, although we are still awaiting the finer details from the FCA (such as the exact dates of the application window). 

Why this matters

2025 was a breakout year for digital assets. The market's growth was exponential and the ecosystem moved from experimentation to implementation. 

All major financial centres, including the UK, aspire to be the digital assets jurisdiction of choice. The UK Government has placed 'further and faster' growth through the financial services sector firmly at the heart of its economic policy. And the FCA continues its regulatory journey to become a smarter regulator, supporting UK economic growth, enabling innovation, embracing new technology and reducing the regulatory burden.

The UK is very mindful of international regulatory cadence and, perhaps, previous criticisms of its digital assets speed. The December 2025 and January 2026 FCA publications demonstrate major progress and the UK's continued intent to increase its cryptoasset velocity. However, a number of cryptoasset regulatory points have been left for consultation in 2026, and there is still much other work to be done by the UK to keep pace.

The FCA December 2025 consultations close on 12 February 2026. We expect further FCA cryptoasset consultations in Q1 2026. For our updates and thought leadership visit www.ashurst.com/digitalassets.