Britain’s financial regulator has confirmed that crypto firms must secure formal authorization by September 2026 to continue operating under new rules taking effect in 2027, which will end the current registration-only system and require full regulatory approval for digital asset businesses.
The Financial Conduct Authority announced that the application window will open in September 2026, giving companies at least 28 days to submit licensing requests before the deadline, which closes 28 days before the regime’s launch.
The transition marks a fundamental shift for crypto operators currently registered under money laundering regulations, as there will be no automatic conversion to the new licensing system.
Firms already authorized under the Financial Services and Markets Act for other activities must vary their existing permissions, while companies relying on third-party approvers for marketing materials will need direct FCA authorization to continue promoting services to UK customers.
Gateway Opens After Years of Regulatory Development
The licensing timeline builds on comprehensive regulatory proposals published last month following years of consultation with industry participants.
The FCA launched three consultation papers covering trading platforms, staking services, lending protocols, decentralized finance operations, market abuse standards, intermediary requirements, and prudential safeguards, all due by February 12.
David Geale, executive director for payments and digital finance at the FCA, said during that time that “regulation is coming,” and officials want to get implementation right after listening to industry feedback.
The framework applies principles similar to those of traditional finance, requiring transparency for consumers and proportionate requirements for firms, while maintaining flexibility for innovation across eight core regulatory areas.
Chancellor Rachel Reeves also described bringing crypto into the regulatory perimeter as crucial for “securing the UK’s position as a world-leading financial centre in the digital age.”
Treasury legislation introduced on December 15 places crypto firms under identical supervision as traditional financial products, including transparency standards, with Economic Secretary Lucy Rigby adding that the rules provide the clarity firms need for long-term planning.
Application Process Determines Operating Status
Companies applying during the September window can continue operating under a saving provision if decisions remain pending when new rules commence.
The provision extends to Upper Tribunal appeals, though regulators retain the authority to place firms in transitional status under certain circumstances when applications are refused.
Firms submitting applications outside the designated window will enter transitional provisions by operation of law if authorization remains incomplete when the regime launches.
While in transition, operators can only perform pre-existing contracts, but cannot conduct new regulated cryptoasset activities until receiving formal approval, with no expedited assessment compensating for late submissions.
The regulator is organizing information sessions for firms potentially affected by the new regime, covering authorization processes, regulatory standards, and compliance expectations.
These sessions target companies registered under the money laundering rules, payment service regulations, and electronic money rules, as well as firms requiring permission variations.
Pre-application meetings through the FCA’s support service remain available free of charge, though officials emphasized meetings do not guarantee successful applications.
Broader Framework Follows Market Infrastructure Growth
The licensing requirements cap regulatory evolution following Parliament’s formal recognition of Bitcoin and crypto assets as legal property under legislation granted royal assent in December.
The Property (Digital Assets, etc.) Bill confirmed that digital assets can be owned, inherited, and recovered under property law protections, resolving legal ambiguity around ownership disputes and fraud cases.
The FCA has also accelerated application reviews back in September, cutting approval times from 17 months to five months while raising acceptance rates from 15% to 45%.
BlackRock and Standard Chartered secured registrations as the regulator improved processes through pre-approval meetings and industry roundtables, with around 12% of UK adults now holding crypto according to official data.
Britain’s approach follows the European Union’s Markets in Crypto-Assets Regulation while coordinating with the United States through the Transatlantic Taskforce on digital asset standards.
The Bank of England separately proposed stablecoin regulations with final rules expected by the end of 2026, while the Treasury advanced decentralized finance tax reforms backing deferred capital gains treatment until users withdraw tokens.
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