The UK is moving to fold crypto firms into mainstream financial regulation, with new rules due to take effect in October 2027, sources tell Reuters. The Treasury plans to extend existing financial laws so exchanges, wallet providers and other crypto-service firms will face the same regulatory framework applied to banks and brokers — not just anti-money-laundering registration.
What changes and who will supervise
- The Financial Conduct Authority (FCA) is set to be the principal regulator for the sector.
- Firms will have to meet traditional-finance standards on reporting, governance and customer protections.
- Regulators will gain stronger powers to tackle fraud, market abuse and other misconduct.
Why the shift now
- Officials say the move is primarily about consumer protection: blocking bad actors, reducing scams and restoring public confidence after a string of high-profile frauds.
- The Treasury is also reportedly considering tighter controls on political donations made in cryptocurrency.
How the transition will happen
- The Treasury has circulated draft legislation; ministers expect complementary rules from the FCA and the Bank of England by the end of 2026.
- The legal regime will come into force in October 2027, with consultations and regulatory sandboxes running in the interim so firms can prepare.
- Government sources say the draft bill has only seen minor edits since its initial publication.
Where the UK sits internationally
- The UK’s approach is being framed as closer to the US model than to the EU’s Markets in Crypto-assets (MiCA), introduced in 2024. Officials argue this alignment could help cross-border firms, but questions remain about how UK rules will differ in practice from US and EU regimes.
Industry reaction
- Responses are mixed: many firms welcome the regulatory clarity and long-term legal certainty, while lawyers and trade groups are pressing for clearer detail on how existing conduct rules will be applied to crypto business models.
- The FCA is running targeted workstreams, including tests for stablecoin issuers and custody providers, to refine the regime.
What to watch next
- Finalised FCA and Bank of England rules by end-2026.
- Ongoing consultations and sandbox outcomes that will shape compliance costs and operational requirements.
- Details on political-donation rules and how the UK’s approach will diverge from US and EU frameworks.
Bottom line: the UK is signalling that crypto firms operating long-term in the market will need to meet the same regulatory standards as traditional financial institutions — but the next 18–24 months of rule-making and consultations will determine how that regime looks in practice.
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