On 29 April 2025, HM Treasury published a draft statutory instrument titled “The Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025” with an accompanying policy note setting out the proposed UK financial services regulatory regime for cryptoassets.
Regulatory Framework
The new framework amends the UK Regulated Activities Order (RAO) to create new categories of specified investments and associated new specified activities for cryptoassets. The new categories of specified investments are “qualifying cryptoassets” and “qualifying stablecoin”. There are also new specified regulated activities requiring FCA authorisation including, stablecoin issuance, arranging deals in qualifying cryptoassets, qualifying cryptoasset staking, and operating a qualifying cryptoasset platform amongst others.
Chancellor Rachel Reeves, speaking at UK Fintech Week, emphasised that these regulations will “boost investor confidence, support the growth of Fintech and protect people across the UK”.
The draft SI imposes different authorisation requirements based on who firms serve and what activities they perform. Firms running trading platforms or dealing in cryptoassets must get UK authorisation if they have UK retail customers, no matter where the firms themselves are located. However, overseas firms will not need authorisation if they only serve UK institutional clients, as long as those institutions are not passing the services on to retail consumers.
The rules also vary by activity type. Firms providing safeguarding services or staking facilities need UK authorisation if they are either based in the UK or serving UK consumers from abroad. For stablecoin issuers, the rules are more limited; they only need authorisation if they are issuing stablecoins from a UK establishment. This approach aims to protect everyday consumers while allowing more flexibility for institutional and international business.
Exclusions and Special Provisions
The rules exclude the creation and minting of qualifying stablecoins from regulated activities. Group activities and introductions to authorised providers are also excluded. The SI does not include special provisions for decentralised finance models, with the Policy Note clarifying that truly decentralised activities will not require authorisation.
Implications
The proposed regulations represent a significant expansion of the UK’s regulatory perimeter, bringing previously unregulated cryptoasset activities within the established financial services regime. Firms will need to carefully consider whether they fall within the scope of the new regulated activities and prepare for authorisation where necessary. The transitional arrangements outlined in the policy note include a wind-down period of a maximum of 2 years for existing firms who fail to acquire the relevant permission, providing some certainty for current market participants.
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