UK to Regulate Crypto Under Financial Services Laws from October 2027
The UK Treasury will extend existing financial services laws to cover cryptoasset firms, bringing exchanges, wallet providers, stablecoin issuers and other crypto service companies under Financial Conduct Authority (FCA) supervision from October 2027. Draft legislation circulated to Parliament expands requirements beyond AML registration to include disclosure, custody rules, market‑abuse protections, token issuance transparency and stronger governance and reporting standards. Complementary FCA and Bank of England rules — including stablecoin and market‑conduct regimes — are expected by end‑2026, with consultations and regulatory sandboxes ongoing to help firms prepare. Officials frame the approach closer to US practice than the EU’s MiCA and plan a UK–US taskforce to coordinate policy. The move aims to strengthen consumer protection, improve detection of illicit transactions and aid sanctions enforcement after rising crypto fraud and investment‑scam losses in the UK. Industry reactions are mixed: some welcome regulatory clarity and potential to attract investment and jobs, while law firms and crypto businesses seek clearer detail on how conduct rules will apply to crypto‑native business models. Expected effective date gives firms time to adjust; officials are also considering tighter rules on crypto political donations.
Neutral
Short-term: Neutral to slightly negative. Announcing clear regulation creates short-term uncertainty for some tokens and firms as markets price in compliance costs, potential restrictions and operational changes — particularly for custodial platforms and stablecoin issuers. Traders may see elevated volatility around policy milestones (draft passage, FCA/BoE rule releases, consultations) but no immediate ban or hostile action has been signalled. Long-term: Neutral to mildly bullish for regulated exchange-traded liquidity and mainstream adoption. Clear, bank-style conduct rules and FCA supervision reduce legal uncertainty, improve institutional investor confidence, and can boost onshore listings, volume and product development over years. Stablecoin clarity and better fraud enforcement should improve market integrity. Overall, the news shifts structural risk from regulatory ambiguity to compliance costs; that favors professional capital and infrastructure growth while imposing transitional pressures on some crypto-native firms.