Key conclusions

• The UK plans to introduce cryptocurrency into financial services by October 2027, moving towards a structured regulatory system.

• The Financial Conduct Authority has launched a consultation to set standards and requirements for crypto firms, with final rules expected to appear in 2026.

• The recent framework marks a move away from basic anti-money laundering registration towards a detailed licensing regime reflecting conventional financial products.

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

The UK is moving away from a ‘wait and see’ approach towards a formal rulebook that closely resembles the framework used by major banks. The Treasury and the Financial Conduct Authority (FCA) have set October 2027 as the target date for the full implementation of the recent crypto regime in the country. FHM TrIt represents the structured integration of digital assets into the financial services space in the UK.

The evolution of the UK cryptocurrency regulatory framework

The UK has long taken a cautious stance on cryptocurrencies. Until the end of 2025, most crypto activity in the UK was primarily subject to anti-money laundering (AML) regulations, financial promotion requirements and FCA guidance. This meant that firms had to demonstrate powerful AML controls to be added to the FCA register, but were not subject to the full scope of the UK financial services rulebook.

It was not a complete regulatory regime because it did not take into account consumer protection, capital requirements or market supervision in the way banking or brokerage regulations do. There was also uncertainty over the treatment of trading platforms, staking, decentralized finance (DeFi) and other advanced crypto services.

The planned regulatory change, which is scheduled to take place by 2027, marks a departure from the previous patchwork approach. Rather than regulating cryptocurrencies primarily through AML compliance, the UK intends to bring crypto activities into the scope of core financial services, bringing them in line with the regulatory standards applied to conventional financial products.

Did you know? At the end of 2025 approx 50 Crypto companies have been registered with the FCA for anti-money laundering purposes, although many applications have been reported to have failed to meet the regulator’s expectations in terms of risk management and control.

The UK’s recent crypto policy roadmap

In December 2025, the UK Government took a landmark step by presenting the Financial Services and Markets Act 2000 (Crypto Assets) Regulations 2025 to the UK Parliament for approval. This statutory instrument establishes the legal basis for including a wide range of crypto activities within the scope of regulated financial services in the UK.

In line with the regulations, implementation will take place in stages, with full commencement in October 2027. The measures taken expand the list of activities regulated by the Financial Services and Markets Act 2000 (FSMA) to include:

• Crypto asset trading platform operation

• Trading crypto assets as a principal or agent

• Arranging transactions and providing fiduciary services

• Some aspects of lending, borrowing and betting.

This legal framework does not yet implement the full set of rules. Instead, it empowers the FCA to develop detailed regulations and implement them once the scheme comes into force. According to the government, these measures are intended to support responsible innovation, strengthen consumer protection and improve market transparency, while preventing bad actors from exploiting regulatory loopholes.

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

Importantly, these regulations have been submitted to parliament, but in December 2025 they have not yet entered into force. They form the core legal architecture that the FCA will exploit to develop standards of conduct and obligations for industry participants.

Up-to-date FCA standards

Following the introduction of the regulatory framework, the FCA launched a series of consultations to translate the wide range of legal powers into practical and enforceable rules.

On December 16, 2025, the regulator published three consultation papers outlining proposed regulatory approaches to crypto activities. These documents do not constitute final rules. Stakeholder responses are due by February 12, 2026, with final regulations expected later in 2026, prior to implementation in 2027.

Consultations include:

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

• CP25/41: : It requires token issuers to provide greater transparency in their projects and introduces a recent market abuse regime (MARC) aimed at tackling insider trading and price manipulation.

• CP25/42: : It establishes prudential requirements, requiring companies to have sufficient capital and liquidity to protect users and maintain system stability in the event of business failure.

These proposals aim to provide crypto companies with a regulatory base similar to that of conventional financial institutions, including governance standards, prudent operational risk controls, consumer obligations and market integrity requirements. The outcome of these consultations will determine the precise set of regulations that the industry will need to comply with once the system comes into force.

Up-to-date restrictions on cryptocurrency donations to political purposes in the UK

Separate from financial services regulation, British lawmakers have turned their attention to the treatment of cryptocurrencies in political finance. As of December 2025, cryptocurrency donations are not expressly prohibited under UK political finance law. British Electoral Commission guidelines delicacies cryptocurrency donations in the same way as other forms of donations, provided that sufficient information is available to verify the acceptability and value of the donor.

In December 2025, the UK government launched a review of foreign financial interference, examining potential safeguards in political finance laws, including the exploit of cryptocurrency donations. The review could form the basis for future policy recommendations, and its report is expected to be published by March 2026.

Ministers and commentators have raised concerns about the traceability of cryptocurrency donations, particularly where pseudonymous wallets can hidden the origin of the funds. According to the media reports citing government officials, future election reform legislation could include proposals to limit cryptocurrency donations for political purposes, although any changes would require recent primary legislation.