UK to Put Crypto Under Financial Regulation, Effective October 2027
The UK government will introduce legislation to bring cryptocurrency firms under existing financial services law, with Financial Conduct Authority (FCA) supervision to take effect in October 2027. A bill will be tabled in Parliament building on draft rules published in April that cover crypto exchanges and stablecoin issuance. The move aligns the UK more with the US approach—folding crypto into traditional financial regulation—rather than a bespoke regime like the EU’s MiCA. The Bank of England has separately proposed a stablecoin oversight regime (consultation open until February 2026). Chancellor Rachel Reeves said clearer rules will attract investment, create jobs and keep “dodgy actors” out of the market; the Treasury indicated openness to international regulatory cooperation where appropriate. For traders: expect clearer compliance requirements for exchanges and stablecoin issuers, potential higher onboarding friction for some services, and reduced regulatory uncertainty over the medium term—factors likely to affect liquidity, custodial practices and stablecoin usage.
Neutral
The legislation reduces regulatory uncertainty, which is generally positive for market confidence and institutional entry over the medium to long term. Clear rules on exchanges and stablecoins can boost institutional participation, improve custody and compliance standards, and reduce fraud risk—supporting a more stable market structure. In the short term, stricter compliance and onboarding requirements may raise operational costs for some firms and limit access to certain services, causing temporary liquidity squeezes or localized volatility. Stablecoin issuers might face new oversight that could change issuance or reserve practices, affecting stablecoin flows. Overall, these effects balance out: long-term structural benefits and reduced tail risk are offset by short-term operational friction and potential consolidation among service providers, making the net price impact on crypto broadly neutral.