2 days ago
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TLDR
- The UK’s Financial Conduct Authority (FCA) plans to begin authorizing crypto firms in 2026 under a more stringent regulatory regime
- Only 14% of crypto firms (50 out of 368) have passed the current anti-money laundering registration process
- Coinbase recently secured FCA registration, allowing it to offer both cryptocurrency and cash services in the UK
- FCA chief Nikhil Rathi expressed concern over young people investing in high-risk crypto before traditional financial products
- The UK has seen increasing crypto adoption with 12% of adults now owning cryptocurrency, up from 10% previously
The UK’s Financial Conduct Authority (FCA) intends to begin authorizing crypto firms under a new, more stringent regulatory regime in 2026. This marks a major shift in how digital assets will be supervised in the country. The current system primarily focuses on anti-money laundering compliance.
Matthew Long, director of payments and digital assets at the FCA, revealed these plans in a recent interview. He described the upcoming framework as an “impending gateway regime.” This new approach will require even currently registered firms to seek fresh authorization.
The FCA has been selective in its approach to crypto registration so far. Of the 368 firms that applied for the current anti-money laundering register since 2020, only 50 have been approved. This represents a success rate of just 14%.
The new authorization process will be more comprehensive than the current system. It will cover a wider range of activities including stablecoins, trading platforms, and staking services. Companies engaging in these regulated activities will need specific permission.
Beyond AML: The New Crypto Oversight
Long indicated that the FCA will release several consultation papers this year. These will address stablecoins, trading platforms, staking, and prudential crypto exposure. The final policies are expected to be published before the regime goes live in 2026.
Speaking at the Treasury Select Committee, Nikhil Rathi said the FCA will always be anchored to our primary objectives to protect consumers, ensure market integrity and promote competition in the interest of consumers while also playing our role in supporting growth. pic.twitter.com/W09J901J7J
— Financial Conduct Authority (@TheFCA) March 25, 2025
Stablecoin regulation will receive special attention in the new framework. “What we’re doing in terms of the stablecoins is we’re making sure that we take the best from the current regulation that exists in TradFi, but stablecoins are ultimately unique,” Long explained. The FCA plans to adapt existing financial regulations to fit this new asset class.
The transition process for currently registered firms remains undecided. Long suggested that even registered companies may need to go through another application process. This would be necessary if they want the “wider permissions” offered under the new regime.
The FCA is looking at international models as it formulates its approach. This includes examining Europe’s bespoke crypto legislation and the International Organization of Securities Commissions’ recommendations. The goal is to understand and implement global best practices.
While the regulatory landscape evolves, some crypto companies have already made progress under the current system. Coinbase, one of the world’s leading cryptocurrency exchanges, recently secured registration with the FCA. This achievement allows the company to offer both cryptocurrency and cash services to UK customers.
Keith Grose, Coinbase’s UK CEO, expressed enthusiasm about this development. “It opens up new channels and opens up the ability to launch new products and services,” he stated. The registration enables Coinbase to integrate fiat and cryptocurrency services more seamlessly.
Coinbase’s journey to registration wasn’t straightforward. In October 2020, the company entered into a voluntary requirement with the FCA due to concerns about its financial crime control framework. Despite these challenges, Coinbase eventually met the regulator’s standards.
The FCA’s approach comes amid growing crypto adoption in the UK. Recent findings show that 93% of UK citizens are now aware of cryptocurrencies, up from 91% previously. Furthermore, 12% of UK adults now own crypto, an increase from 10% in earlier surveys.
This rising interest has raised concerns among regulators. Nikhil Rathi, chief executive of the FCA, recently expressed worry about young people’s investment choices. Speaking to MPs, he noted that too many Britons under 35 are making crypto their first investment.
Rathi described these investments as “very highly risky” and warned that investors could lose all their money. He advocated for more investment in traditional shares and bonds instead. “One thing I think is not great is the sheer number of under 35-year-olds for whom the financial product that they invest in first is crypto,” Rathi stated.
The FCA chief also noted that the UK has a “low level” of share ownership compared to countries like the US or Sweden. He attributed this to “a mix of tax, education, regulation and broader culture.” As part of its new strategy, the FCA aims to encourage more investment in equity or bond markets.
The regulator’s approach to crypto remains cautious. The FCA has repeatedly warned that crypto investments remain largely unregulated and high-risk in the UK. “If something goes wrong, it is unlikely you will be protected so you should be prepared to lose all your money,” the FCA stated last year.
Despite these concerns, the UK’s crypto ecosystem continues to develop. The 2024 Global Crypto Adoption Index by Chainalysis ranked the UK 12th in its overall ranking of countries. This suggests that despite regulatory caution, crypto adoption continues to grow.
As the 2026 target date approaches, crypto firms operating in the UK must prepare for more detailed oversight. Long emphasized that the FCA will communicate with firms about what the gateway will look like before it goes live. “Our intention is to bring it live as soon as humanly possible,” he added.
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