UK Moves to Tighten Crypto Rules While Keeping Innovation Alive

The UK government has announced a comprehensive regulatory framework for crypto businesses, set to take effect in October 2027. The aim is to protect consumers and ensure market stability while fostering growth.

Key Provisions

• Capital Requirements
• Minimum capital: 1 % of tokens issued (down from 2 %).
• Issuers may hold up to 5 % cash reserve.

• Limited intragroup custody allowed with extra safeguards.

• Stress Testing
• Annual tests required.

• Crypto firms design their own models; banks receive preset scenarios from the Bank of England.

• Market Abuse Controls
• Monitoring for insider trading and manipulation.
• Large platforms will adopt an industry‑led system; on‑chain surveillance is limited.

• Stablecoin Rules
• Lighter regulatory burden compared to other crypto assets.

Licensing and Compliance

• Firms must apply for FCA authorization under the new regime.
• Existing anti‑money‑laundering registrations are not sufficient.
• Application window: 30 September 2026 – 28 February 2027.
• FCA will hold preparatory meetings from July onward.

Current Oversight

Until the rules take effect, the FCA focuses on:

• Advertising compliance
• Anti‑money‑laundering measures

Impact Summary

The FCA believes the new rules provide certainty for firms while preserving room for innovation. Consumers can expect standards comparable to traditional financial services, though inherent risks remain.