The UK’s Financial Conduct Authority (FCA) has announced that any firm intending to engage in the newly regulated cryptoasset activities must obtain formal authorisation under the Financial Services and Markets Act 2000 (FSMA) before the new regime takes effect.
This requirement extends to firms currently registered under the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2017 (MLRs), as well as those registered or authorised under the Payment Services Regulations 2017 or the Electronic Money Regulations 2011.
Notably, firms registered under the MLRs will not receive automatic conversion and must secure FSMA authorisation prior to the regime’s commencement. Existing FSMA-authorised firms will need to adjust their permissions to cover the new cryptocurrency activities, while firms relying on FCA-authorised third parties to approve their financial promotions will no longer be able to do so and must obtain direct FCA authorisation to continue marketing to UK customers.
Part 7 of the Treasury’s draft Statutory Instrument introduces a defined window for firms to submit applications for authorisation under the upcoming cryptoasset regime, or to request variations to existing FSMA permissions for those already authorised.
This designated application period must run for a minimum of 28 days and conclude at least 28 days before the new regulatory framework comes into effect. The FCA anticipates that this application window will open in September 2026, providing firms with a structured timeline to secure compliance ahead of the regime’s launch.
Cryptoasset firms that submit their authorisation or variation applications during the designated application period can generally expect the FCA to determine their applications before the new regime takes effect. If a decision is not reached in time, the Treasury’s draft Statutory Instrument provides a saving provision, allowing firms to continue offering cryptoasset services until their application is fully resolved.
This provision also applies when a firm has challenged a refusal decision with the Upper Tribunal but the Tribunal has not yet issued a final ruling. In certain circumstances, the FCA may require a firm to enter the transitional provision instead of relying on the saving provision. If the Tribunal upholds a refusal, the firm must follow the transitional provision to exit the UK market in an orderly way; if the Tribunal overturns or modifies the decision, the firm may resume operations accordingly. Firms using the saving provision must notify the FCA promptly once the regime is fully in force and again when they no longer rely on it, with detailed notification procedures to be published by the FCA.
Firms that submit applications outside the application period can still apply, but the FCA will not accelerate assessment to compensate for late submission. If such firms are not authorised before the regime begins, they will automatically enter the transitional provision, which permits them to maintain pre-existing contracts but prohibits undertaking new UK-regulated cryptoasset activities until full authorisation is granted.
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