How the UK plans to regulate crypto like traditional finance

Key takeaways

• The UK plans to introduce cryptocurrencies into the financial services scope by October 2027, moving towards a structured regulatory regime.

• The Financial Conduct Authority has launched consultations to set standards and requirements for crypto companies, with final rules expected in 2026.

• The new framework marks a move away from basic anti-money laundering registration towards a detailed licensing system that mirrors traditional financial products.

• Separately, the government has launched an independent review into foreign financial interference, which could lead to future restrictions on the use of cryptocurrency for political donations in the UK.

The UK is moving away from a ‘wait and see’ approach towards a set of formal rules that closely resemble the framework used by the big banks. HM Treasury and the Financial Conduct Authority (FCA) have set October 2027 as the deadline for the country’s new crypto regime. This is not a minor update. It represents a structured integration of digital assets into the UK financial services scope.

This article discusses the UK’s move towards a comprehensive crypto regulatory framework by 2027, including new legislation and evolving rules around political donations.

Evolution of the UK crypto regulatory framework

The UK has long taken a cautious stance towards cryptocurrencies. Until the end of 2025, most crypto activity in Britain was primarily governed by anti-money laundering (AML) rules, financial promotions requirements and FCA guidelines. This meant that firms had to demonstrate strong AML controls to be added to the FCA register, but they were not subject to the full scope of the UK’s financial services rules.

It was not a comprehensive regulatory regime, as it did not address consumer protection, capital requirements, or market supervision in the way that banking or brokerage regulations do. There are also uncertainties around the treatment of trading platforms, staking, decentralized finance (DeFi), and other advanced crypto services.

The planned regulatory change, expected by 2027, marks a departure from the previous patchwork approach. Instead of regulating crypto primarily through AML compliance, the UK intends to bring crypto activities within the scope of core financial services, aligning them with legal standards applied to traditional financial products.

Did you know? End of 2025, approximately 50 Crypto companies have been registered with the FCA for anti-money laundering purposes, although many applications reportedly failed to meet the regulator’s expectations for governance and risk controls.

The new UK crypto policy roadmap

In December 2025, the UK Government took a historic step by submitting the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 to the UK Parliament for approval. This regulatory instrument establishes the legal basis for bringing a wide range of crypto activities into the scope of regulated financial services in the UK.

Under the regulations, implementation will take place in stages, until a full start in October 2027. The measures expand the list of activities regulated by the Financial Services and Markets Act 2000 (FSMA) to include:

• Operating a crypto asset trading platform

• Trading crypto assets as a principal or agent

• Organize transactions and provide custody services

• Certain aspects of lending, borrowing and staking.

This legislative framework does not yet implement all the rules. Instead, it empowers the FCA to develop detailed regulations and introduce them as the regime comes into force. According to the government, these measures aim to foster responsible innovation, strengthen consumer protection and improve market transparency, while preventing bad actors from exploiting regulatory loopholes.

“By giving businesses clear rules of conduct, we are providing them with the certainty they need to invest, innovate and create high-skilled jobs here in the UK,” said Rachel Reeves, adding that the aim is to protect millions of consumers while maintaining high standards across the market.

Importantly, these regulations were laid before Parliament but were not yet in force as of December 2025. They form the basic legal architecture that the FCA will use to develop standards of conduct and obligations for industry participants.

The new FCA standards

With the regulatory framework in place, the FCA launched a series of consultations to translate broad legal authority into practical and enforceable rules.

On December 16, 2025, the regulator published three consultation documents outlining proposed regulatory approaches for crypto activities. These documents do not represent definitive rules. Stakeholder responses are expected by February 12, 2026, and final rules are expected later in 2026, before implementation in 2027.

Consultations include:

• CP25/40: Sets out operational requirements for trading platforms and brokers, introducing mandatory controls around staking services and certain DeFi-related activities to support market integrity.

• CP25/41: Requires token issuers to provide greater transparency on their projects and introduces a new Market Abuse Regime (MARC) aimed at combating insider trading and price manipulation.

• CP25/42: Establishes prudential requirements by requiring businesses to hold sufficient capital and liquidity to protect users and maintain system stability in the event of business failure.

These proposals aim to place crypto companies on a regulatory framework similar to that of traditional financial institutions, including governance standards, prudent operational risk controls, consumer duty obligations and market integrity requirements. The outcome of these consultations will determine the precise rules that the industry will have to follow once the regime comes into force.

New restrictions on crypto political donations in the UK

Separate from financial services regulation, UK lawmakers have turned their attention to the treatment of cryptocurrency in political funding. As of December 2025, crypto donations are not explicitly prohibited by UK political financing law. UK Electoral Commission guidance treats crypto donations in the same way as other forms of donations, provided that sufficient information is available to verify the donor’s authorization and value.

In December 2025, the UK government launched a review of foreign financial interference, examining potential safeguards in political funding laws, including the use of cryptocurrency donations. The review could inform future policy recommendations and is expected to report by March 2026.

Concerns about the traceability of cryptocurrency donations have been raised by ministers and commentators, particularly where pseudonymous wallets can mask the origin of funds. According to media reports citing government officials, future election reform legislation could include proposals to restrict political donations in crypto, although any changes would require new primary legislation.