TLDR
- By 2026, the UK Financial Conduct Authority (FCA) plans to begin officially licensing crypto firms under a more rigorous regulatory framework.
- Only 14% of crypto companies, specifically 50 out of 368, have successfully navigated the current anti-money laundering registration hurdles.
- Coinbase has recently achieved FCA registration status, empowering them to provide both cryptocurrency services and cash transactions within the UK.
- Nikhil Rathi, the head of the FCA, voiced his concern about the increasing number of young individuals diving into high-risk crypto investments instead of opting for traditional financial products.
- The UK's interest in cryptocurrencies is on the rise, now with 12% of the adult population holding some form of digital assets, marking a climb from 10% previously.
The UK Financial Conduct Authority aims to introduce a more stringent crypto regulatory framework in 2026, indicating a significant transformation in the oversight of digital currencies within the nation. The current approach heavily centers on anti-money laundering rules.
In a recent discussion, Matthew Long, the FCA's director of payments and digital assets, unveiled plans for what he termed an 'impending gateway regime' that will require newly registered as well as existing firms to pursue fresh authorization.
The FCA has been meticulous in its crypto registration approach until now. From 368 applications since 2020 under the anti-money laundering register, only 50 have cleared the hurdles—reflecting a 14% success rate.
Going beyond the existing system, the new licensing procedures will be all-encompassing, addressing a broader spectrum of activities like stablecoins, trading floors, and staking, with companies needing particular permission for these operations.
Beyond AML: The New Crypto Oversight
Long unveiled that multiple consultation papers will be published this year by the FCA, which will delve into subjects like stablecoins, exchange platforms, staking, and crypto prudential exposure. The finalized guidelines expected prior to the 2026 rollout.
During a session at the Treasury Select Committee, Nikhil Rathi assured that the FCA remains committed to safeguarding consumers, preserving market integrity, and fostering competition in customers' favor, while also ensuring support for growth. pic.twitter.com/W09J901J7J
— Financial Conduct Authority (@TheFCA) March 25, 2025
Special attention in the new regulatory framework will be dedicated to stablecoins. As Long elaborated, current TradFi regulations will be adapted for these distinct digital assets, ensuring the best practices are applied.
The transition plan for currently listed firms remains undecided, but Long hinted that even those firms might have to undergo a new application process if they want to obtain 'broader permissions' under the impending rules.
As the FCA outlines its future course, it is examining international methods, including the tailored crypto laws of Europe and suggestions from the International Organization of Securities Commissions, to adopt the finest global practices.
Despite changes in regulatory frameworks, certain crypto ventures have thrived under present guidelines. Coinbase, a preeminent player in the cryptocurrency exchange sphere, has recently been granted FCA registration, enabling the provision of both cryptocurrency and cash services in the UK.
Keith Grose, UK's head of Coinbase, shared his excitement over this milestone, noting how it opens up avenues for launching novel products and services by integrating money and digital currency solutions more effectively.
Navigating towards registration hasn't been a smooth ride for Coinbase. Following a voluntary mandate with the FCA in October 2020 over its financial crime controls, Coinbase persevered through hurdles to meet regulatory benchmarks.
Even as crypto adoption soars in the UK, FCA data reflects that 93% of UK residents are now aware of cryptocurrencies, with 12% personally investing as opposed to 10% in prior surveys.
The burgeoning interest in cryptocurrencies is prompting caution among UK regulators. FCA's chief, Nikhil Rathi, warned MPs about the trend of younger Britons—those under 35—making crypto their first financial venture.
Rathi emphasized these investments as 'extremely risky' and cautioned about potential losses, while advocating for investments in conventional stocks and bonds. He stressed discontent about the increasing number of young adults for whom crypto is a primary financial investment.
Rathi critiqued the low benchmark of share ownership in the UK compared to nations like the US or Sweden, attributing the situation to a 'mix of fiscal policy, education, regulations, and broader culture.' The FCA plans to promote more equity and bond investments.
The FCA maintains a wary stance towards cryptocurrencies, reiterating how the sector largely eludes thorough regulation and poses high risks. in the UK. In past statements, the FCA made it clear that investors should brace themselves for potential total losses in the unregulated crypto sphere.
Despite these concerns, the UK’s crypto Despite vigilance, the crypto landscape in the UK remains vibrant. According to the 2024 Global Crypto Adoption Index by Chainalysis, the UK ranks 12th globally, hinting at sustained crypto enthusiasm.
As the 2026 rollout looms, crypto enterprises within the UK brace for intricate measures. Long highlighted that the FCA will advise firms about the new regulatory gateway beforehand, asserting a commitment to timely implementation.
