The United Kingdom unveiled plans for a comprehensive regulatory framework for crypto in 2026, with the Financial Conduct Authority set to replace the current anti-money laundering system to offer a detailed authorization process for digital assets companies.
The Financial Conduct Authority (FCA) aims for a stringent regulatory regime next year that crypto firms need to comply. It marks a major shift in how FCA will supervise digital assets within the country. Under the current system, the supervision primarily focuses on anti-money laundering compliance.
UK New Crypto Regulation
In a recent interview, Mathew Long from the FCA’s Payments and Digital Assets Department revealed that the upcoming regulatory framework will become the impending gateway regime. The FCA eyes all crypto firms, including the registered, to seek fresh authorization under the new framework.
As the watchdog of the UK financial sector, FCA has selectively approached its crypto registration only to approve 50 of the 368 applicants. This represents a 14% success rate under the current anti-money laundering register.
The FCA indicated the new authorization process involves a more comprehensive exercise than the present system. The incoming regulatory framework will feature a broader scope of trading platforms, staking, and stablecoins. The regulatory agency indicated companies seeking such activities will need specific authorization.
New Crypto Oversight
The FCA revealed plans to release consultation papers addressing staking, stablecoins, and trading platforms. The regulator will publish the final policies before enforcing the new framework next year.
The new framework will give stablecoin special attention by integrating the best provisions in the current regulations targeted at TradFi. Long noted that stablecoins are unique, with the FCA planning to adapt the financial regulations to match the requirements for the new asset class.
The transition for the registered firms appears undecided, with Long suggesting the need for another application process. This is necessary for firms that seek wider permissions under the new regulatory framework.
The FCA will scrutinize the international models as it formulates the new framework, including assessing Europe’s crypto legislation and recommendations by the International Organization of Securities Commissions. The FCA aims to provide an in-depth understanding of crypto to implement global best practices.
Growing Crypto Adoption
The FCA’s new approach emerges as the UK witnesses growing crypto adoption. Recent statistics show that 93% of UK citizens have crypto awareness, up from 91%. Additionally, 12% of UK adults have crypto holdings,10% higher than in earlier surveys.
The increased interest sparks concerns among the regulators, with FCA chief executive Nikhil Rathi expressing concern about the investment choices of young people. He informed the legislators that many Britons below 35 are already into crypto as their first investment.
Rathi profiled the crypto investments as ‘very highly risky’, warning that the investor is prone to losing all money, instead advocating for them to invest within the traditional bonds and shares asset class. Rathi appeared surprised by the popularity of crypto investment, with 35-year-olds and below leading the adoption.
The FCA chief observed that unlike in Sweden or the US, the UK currently has lower share ownership levels. The executive elaborated on this disparity as being caused by taxation policy, regulation, culture, and education. He indicated the new FCA strategy will encourage more uptake of equity and bond investment.
UK Cautious Approach
The FCA approach appears cautious as it repeatedly warns that crypto investments are high-risk and still unregulated in the country. The regulator warned last year investors that an erroneous outcome could be devastating since they lack protection, resulting in a loss of all money.
The crypto ecosystem appears unconcerned by the risk profile as it sustains accelerated growth. The recent report by Chainalysis ranked 12th last year in the Global Crypto Adoption Index, suggesting growth.
As the 2026 date approaches, the crypto firms should actively prepare for the detailed oversight. Long assured the regulator will communicate with all participants on the gateway for subsequent operations.
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