On December 15, 2025, HM Treasury published a long-awaited final draft Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 (the SI), which builds on the initial draft published in April 2025 (see more on this in the previous article The rise of stablecoins – regulatory landscape in the UK).

Just the day after this publication, the FCA published three interlinked consultation papers that will form the basis for the rules on the regulation of crypto-asset activities; the admissions, disclosures, market abuse regime for crypto assets; and a prudential regime for crypto-asset firms.

When it comes to regulation of crypto-asset activities, whereas the SI is setting the regulatory perimeter by defining regulated types of crypto assets as well as regulated crypto-asset related activities, the FCA Consultation Paper on regulation of crypto-assets activities (the FCA CP) creates a rulebook with detailed requirements applicable to entities whose activities fall within the regulatory perimeter on qualifying crypto assets.  

Taxonomy of crypto assets

While the SI follows the proposed categorization of qualifying crypto assets published in the draft SI in April 2025, it has introduced a number of important amendments to the original proposal.

Qualifying crypto asset	The definition of qualifying crypto assets builds on the definition of crypto assets contained in the Financial Services and Markets Act 2000 (FSMA), which covers any cryptographically secured digital representation of value or contractual rights that: (i) can be transferred, stored, or traded electronically; and (ii) that uses technology supporting the recording or storage of data. In addition to the above-mentioned characteristics, qualifying crypto assets need to be: (a) fungible; (b) transferable; (c) not solely a record of value or contractual rights, including rights in another crypto asset; and (d) not explicitly excluded from the scope of the SI (such as due to their qualification as e-money, official currency, or specified investment crypto asset).
Qualifying stablecoin	Is a qualifying crypto asset that seeks or purports to maintain a stable value in relation to a particular fiat currency. However, in terms of the backing assets that effectively stabilize a crypto asset’s stable value, issuers can use either the referenced fiat currency, another fiat currency, or other asset (but they cannot use anything other than a fiat currency as a reference asset). Therefore, stablecoins that reference value of multiple fiat currencies and/or other assets will not be deemed qualifying stablecoins.
Specified investment crypto assets	This is a specific category intended to capture tokenized financial instruments (typical financial instruments like bonds, structured products, etc.) that do not qualify as qualifying crypto assets.

Regulated activities and exclusions

As originally proposed, the SI makes targeted amendments to the Financial Services and Markets Act (Regulated Activities) Order 2001 by specifying a number of new regulated activities (specified activities) related to qualifying crypto assets, including:

• issuing qualifying stablecoin;
• operating a qualifying crypto-asset trading platform;
• dealing in qualifying crypto assets as principal or agent;
• arranging deals in qualifying crypto assets;
• safeguarding of qualifying crypto assets and relevant specified investment crypto assets;
• and qualifying crypto-asset staking.

In comparison to the original draft SI, the final version introduces some noteworthy changes that include (amongst others):

Issuing qualifying stablecoin

The definition of this activity has been amended and will cover only persons engaging in all of the following activities from the UK: (i) offering (or arranging for another to offer), (ii) undertaking to redeem (or arranging for another to undertake to redeem), and (iii) maintaining the stable value of the qualifying stablecoin.

In terms of the reference assets and the backing assets, the final proposal introduces some further changes: While the issuers will solely be able to use a single fiat currency as a reference asset (such as GBP or USD), they will be permitted to use as backing assets either the reference currency, another fiat-currency, or another asset. Last but not least, the mere minting of a stablecoin will not fall under the scope of this regulated activity.

In order to ensure proper segregation of two distinct regulatory regimes, the SI makes the clarification that forming and holding backing assets will not amount to creating a collective investment scheme or an alternative investment fund, under the Financial Services and Markets Act 2000 (the FSMA framework), provided that: (i) the issuer does not pass on the returns stemming from the backing assets to stablecoin holders and (ii) that stablecoin holders have a redemption right vis-à-vis the issuer at par value at all times.

Operating a qualifying crypto-asset trading platform (CATP)

Under the proposed SI, the qualifying CATP means a system (i) in which multiple third-party buying and selling trading interests in qualifying crypto assets are able to interact within the system, and (ii) that brings together multiple third-party buying and selling interests in qualifying crypto assets in a way that results in a contract for the exchange of qualifying crypto assets for money or other qualifying crypto assets.

By putting the emphasis on a “multilateral system,” this definition largely mirrors the definitions of regulated trading venues that we know from the FSMA framework space, i.e. the retained MiFID II terminology also known across the EU. In comparison to the original draft, the mere facilitation of sale and purchase of qualifying crypto assets will not fall under the scope of this activity – it will largely be deemed as intermediation activity in one of the forms mentioned below.

Qualified staking

The SI introduces a new type of a specified activity that goes to the heart of a highly debatable area of the crypto industry: staking. In accordance with the proposal, the new specified activity will capture persons making arrangements, as principal or agent, on behalf of another person for qualifying crypto-asset staking. Qualifying staking is defined in line with the Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 introduced in January 2025 as the use of a qualifying crypto asset in the validation of transactions on a blockchain or network that uses DLT.

Effectively, the scope of this specified activity is intended to capture persons who are making arrangements for their clients to participate in staking arrangements that are largely in line with the interpretation of the regulatory perimeter in some other jurisdictions, like the EU, where though staking per-se is not regulated, persons making arrangements for others to participate in a staking arrangement may trigger a license obligation under the EU Markets in Crypto-Assets (MiCA) Regulation.  

By recognizing the complexity of the staking ecosystem, the Government has introduced a number of exclusions from the authorization obligation for persons who merely introduce others to the qualifying crypto-asset staking, facilitate information exchange, or act as mere technical service providers.  

Crypto intermediaries

Persons facilitating sale and purchase of crypto assets for others, in various ways, will also be subject to FCA authorization in accordance with the proposed SI. Due to a variety of forms of crypto intermediation, the SI defines several specified activities that shall capture crypto intermediaries by building on the key concepts from the FSMA framework: (i) dealing in qualifying crypto assets as principal or agent and (ii) arranging deals in qualifying crypto assets.

Whereas the scope of these definitions will largely be as wide as the definitions under the FSMA framework, the SI introduces a few helpful clarifications and exclusions that shall keep persons operating at the outskirts of the crypto ecosystem outside the regulatory perimeter.

First, persons accepting payments in qualifying stablecoins will not be deemed dealing as principals insofar as they accept qualifying stablecoins in the course of sale of goods or services as a supplier (merchants). Second, persons merely introducing prospective clients to crypto-asset service providers, facilitating information exchange between them, or making arrangements that do not bring about transaction will generally (provided that they meet exclusion criteria) stay outside the regulatory perimeter.

Territorial scope

In terms of the territorial scope of the new regulatory perimeter, the SI and the FCA CP on regulated activities provide a rather mixed picture. The issuing of qualifying stablecoins is the only regulated activity that must be conducted from the UK establishment; foreign issuers of qualifying stablecoins are generally not in the scope. However, persons making arrangements on purchase, sale, subscription, or underwriting of qualifying stablecoins may still fall under the scope of other regulated activities designed for crypto intermediaries (see more on this above).

When it comes to other regulated activities, the SI follows the known territorial scope of the FSMA framework that captures both entities engaging in regulated activities by a way of business in the UK (such as from a UK establishment) as well as oversees persons who are servicing UK clients (with a narrow exemption for overseas persons servicing institutional clients in the UK).

For firms operating in the UK’s closest neighbor, the EU, this would effectively mean that operating in the UK in the future will require local authorization through a local subsidiary designated for their UK business. The FCA is looking to launch more detailed consultation on the operational model for operators of qualifying CATPs that might be permitted to operate in the UK by combining a local subsidiary and a branch that may allow them to provide UK customers access to their liquidity pools overseas.

Timeline

The SI is scheduled to become applicable as of October 27, 2027, subject to the Parliamentary approval that is expected in the course of this year. In the meantime, the FCA is expected to finalize its work based on the published consultation papers that shall provide detailed requirements in a number of key areas in accordance with the previously published FCA crypto roadmap.

With the aim of enabling the industry to prepare for the new framework in time, the FCA has announced on January 8, 2026, that it is envisaging to start accepting applications for authorization under the new framework as of September 2026.

Practical impact

The forthcoming finalization of the crypto regulatory puzzle in the UK will have significant implications for regulated and non-regulated businesses looking to establish a footprint in the UK by engaging in crypto-asset activities. Shift to a full-scale authorization framework from the existing light-touch AML registration regime combined with the financial promotions regime restricting uncontrolled marketing of qualifying crypto assets in the UK will be quite significant for many in the industry. Whilst the regulatory burden will increase, so will the degree of regulatory certainty and predictability in terms of the counterparty risk management and long-term planning for firms looking to operate in the UK.