The UK Treasury is drafting new legislation to bring cryptocurrencies and crypto firms under the same regulatory framework as traditional financial products, with rules expected to come into force in October 2027, ushering in a comprehensive regime under the supervision of the Financial Conduct Authority (FCA). The move marks a major shift in Britain’s approach to digital assets, aligning them more closely with traditional finance (TradFi) standards.
According to UK government statements and draft legislation shared with Parliament, the new regulatory framework will extend existing financial services law to cover a wide range of crypto activities — including exchanges, custody services, stablecoin issuance and other related services — and require firms offering these services to obtain FCA authorisationand comply with rigorous standards for transparency, consumer protection and market integrity.
Chancellor Rachel Reeves said the initiative will help secure the UK’s position as a global financial centre by providing regulatory clarity and protecting investors while supporting innovation. City Minister Lucy Rigby added that clear “rules of the road” will allow legitimate crypto businesses to grow sustainably in the UK market.
What the new rules will cover
Under the proposed framework, crypto firms will be required to meet the same regulatory standards applied to traditional finance products such as stocks, bonds and other investment vehicles — including obligations related to conduct of business, market abuse, disclosure, prudential controls and anti-money-laundering measures.
The UK’s approach differs from the bespoke regime adopted in the European Union under the Markets in Crypto-Assets (MiCA) framework, opting instead to integrate crypto regulation into existing financial services legislation — a strategy that regulators hope will reduce complexity and improve consistency.
Draft legislation circulated earlier this year would widen the scope of the Financial Services and Markets Act 2000 to include crypto-related activities such as running crypto trading platforms, custody and safekeeping of digital assets, and issuing qualifying stablecoins, bringing these functions under FCA and, where relevant, Prudential Regulation Authority (PRA) oversight.
The FCA has already been consulting on how traditional rules — including conduct requirements, systems controls, investor protections and standards for stablecoin issuance and custody — could be adapted and applied to crypto firms once the legislation is in place.
Timeline and implementation
The UK government has indicated that crypto regulation will officially take effect in October 2027, giving firms and market participants time to prepare for compliance with enhanced regulatory obligations. Complementary regulatory work — including FCA and Bank of England consultations on trading, custody and stablecoin rules — is expected to continue through 2026 ahead of the law’s full implementation.
Final legislative language is expected to be introduced to Parliament in the coming weeks, with the aim of securing approval well before the 2027 enforcement date.
Industry reactions and implications
Industry groups and large crypto firms have given mixed responses. Some welcome the clarity and predictability that a robust regulatory framework will provide, seeing it as a way to attract institutional investment and support long-term growth. Others — including smaller startups — have expressed concern that applying rigorous TradFi-style rules could impose high compliance costs and potentially slow innovation.
Regulatory experts note that by regulating crypto in line with traditional financial products, the UK could offer greater consumer protection and market stability, while distinguishing itself from other jurisdictions with lighter or more fragmented frameworks. However, some critics argue the regulatory burden may be disproportionate for emerging digital-asset business models and could discourage new entrants.
What to watch next
- Parliamentary debate and amendments: How lawmakers shape the final bill and whether certain crypto activities receive tailored carve-outs or exemptions.
- FCA rulemaking: The development of detailed regulations, guidance and supervisory approaches ahead of the 2027 implementation date.
- Market impact: How exchanges, custodians and other crypto firms adjust their operations and compliance strategies in anticipation of the new rules.