UK FCA opens consultation on crypto scope

The Financial Conduct Authority (FCA) is consulting on new guidance to help firms understand how they might be affected by the regulatory regime for digital currencies. Specifically, on its interpretation of qualifying digital currencies, issuing qualifying stablecoins, operating trade platforms, dealing in and arranging deals with qualifying and safeguarding digital currencies, and staking.

The long wait for digital asset regulation in the U.K. will finally be over on October 25, 2027, when the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 come into force, officially bringing new regulated activities for digital currencies under the jurisdiction of the FCA, the country’s top finance sector watchdog. From that date onwards, anyone conducting regulated digital currency activities in the U.K. will need to apply for authorization from the FCA and, once authorized, will need to follow the rules and guidance set out in the FCA handbook.

Ahead of this rollout, the FCA has opened a consultation on its “cryptoasset perimeter guidance.” This consultation will run until June 3, 2026, and is the latest in a series aimed at shaping the future regime. Over the past few years, the FCA consulted on stablecoin issuance and digital currency custody, prudential rules, the application of the FCA Handbook, regulating digital currency activities, and admissions, disclosures, and market abuse.

Based on feedback from these previous consultations, the regulator is now finalizing its rules, which are due to be published this summer. After that, digital asset firms can start applying for authorization from September 30 onwards.

Ahead of these important dates, the FCA is now focusing on helping firms understand how they might be affected by the regulatory regime for digital currencies, including how the regulator defines certain soon-to-be-regulated activities and which entities will fall within this regulatory “perimeter.”

“Parliament has now confirmed which cryptoasset activities will fall within the scope of regulation,” the regulator said in its April 15 announcement. “We are, therefore, consulting on draft perimeter guidance to help firms understand when authorisations will be required.”

In this consultation, the FCA is seeking feedback on whether any further clarification is needed regarding its interpretation of several soon-to-be-regulated digital currency activities: issuing qualifying stablecoins, operating trading platforms, dealing and arranging deals in qualifying digital currencies, safeguarding digital currencies, and staking.

“We want to develop a competitive and sustainable cryptoasset sector where UK consumers are served by authorised cryptoasset firms and can make informed decisions,” the regulator said. “Our new perimeter gives us the tools to strengthen protections for consumers and support fair, transparent and orderly markets as the sector matures.”

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Qualifying digital currencies

The first important point the FCA is seeking feedback on is its definition of “qualifying cryptoassets,” on which much of the regulation hangs.

For the FCA, “qualifying cryptoassets” are the specific assets that will fall within the regulatory regime (or perimeter) and are defined as “a cryptoasset that is fungible and transferable cryptographically, and it must function as more than a mere record of value or rights.”

This definition includes most digital currencies, including the likes of BTC, Ethereum (ETH), XRP, and Solana (SOL).

The FCA goes on to explain that “qualifying stablecoins form a subset of this category,” which it describes as: “A type of qualifying cryptoasset that seeks or purports to maintain a stable value relative to a particular fiat currency and is supported by holdings of fiat or other backing assets.”

This would include many of the leading stablecoins on the market, such as Tether and USDC.

However, certain assets are excluded from the definition of qualifying digital currencies, including “electronic money, fiat currency, central bank digital currencies [CBDC], and cryptoassets that can only be redeemed with the issuer or used within a limited network.”

This may cause some confusion, particularly when it comes to stablecoins, which often effectively function as e-money, are backed by fiat currency, and are redeemable 1:1.

The distinction is that, in the U.K., e-money tokens are broadly considered to be those that give holders a direct, enforceable claim on the issuer, redeemable at par. They would generally be issued by an authorized bank or e-money institution (EMI), and thus already covered under the country’s e-money rules. By contrast, “qualifying stablecoins” are crypto-native, tradable instruments that may track fiat value but operate in broader markets.

Tokens like Tether and USDC would likely qualify for now because they function as widely traded cryptoassets—even if they are often used for settlement and payment purposes—rather than U.K.-issued e-money. If, in the future, they were issued by a U.K. entity with redemption rights, they may be excluded from the digital currency regime and subject instead to e-money regulation.

Beyond the soon-to-be-regulated assets, the FCA also clarified that certain digital assets have always been within the regulatory perimeter, namely “specified investment cryptoassets”, which the regulator describes as “cryptoassets that are specified investments, like tokenized shares.”

The definitions of qualifying cryptoasset and qualifying stablecoin are possibly the crucial takeaways from the consultation, serving as a starting point for anyone assessing whether the incoming regime will apply to them and whether they will need to apply for authorization.

However, firms must also assess whether their activities fall within the regulated perimeter to know if authorization is required.

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Regulated activities

On this, the FCA listed the soon-to-be-regulated activities, which are:

• Issuing qualifying stablecoins in the U.K.;
• Safeguarding, and arranging safeguarding of qualifying digital currencies and relevant specified investment digital currencies;
• Operating a qualifying digital currency trading platform;
• Dealing in qualifying digital currencies as principal or agent, or arranging deals, including both bringing about specific transactions and making ongoing arrangements that facilitate trading;
• And arranging qualifying digital currency staking, including managing the end-to-end staking lifecycle, pooling customer assets to meet validator thresholds, and distributing staking rewards.

This list covers the vast majority of digital currency-related activities, some of which are self-explanatory, such as issuing qualifying stablecoins or operating a U.K.-based trading platform that facilitates trades in qualifying digital currencies.

However, a couple of the categories have somewhat more nuance, and for these, the FCA provided extra detail.

If further ambiguity persists among market participants, the FCA encourages feedback, after which it can provide further clarifications.

Ultimately, if a person determines that an asset is a qualifying digital currency under the FCA definition, and the activity they want to take part in with said asset falls under the list of regulated activities, they will then need to obtain a license from the FCA, comply with the associated standards and obligations, and be subject to the regulator’s enforcement.

Those that fall foul of the regulation may face fines, prohibition, public censure, and/or prosecution.

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UK’s slow progress to regulation

While the consultation process continues, digital assets remain largely unregulated in the U.K., as the country has been comparatively slow to act in this area, preferring to watch how legislation and regulation for crypto-assets have panned out in other jurisdictions before settling on an approach.

Those other jurisdictions in question include the European Union, whose landmark Markets in Crypto Assets (MiCA) regulation came fully into force last year, and the United States—notorious for the snail pace of its conflictual legislative process—which managed to get a stablecoin bill signed into law last July, in the form of the GENIUS Act.

The comparative lack of progress in the U.K., where an extended consultation process has replaced any notable new legislation, has naturally caused some frustration for those seeking clarity.

“The introduction in the U.K. of a crypto regulatory regime is significantly lagging behind Europe, which is more advanced in introducing a fully enforced framework,” Thomas Cattee, white-collar crime partner at Gherson Solicitors LLP, told CoinGeek.

With this in mind, he went on to praise the announcement of the FCA’s latest consultation as a sign of much-needed progress, saying that “another slow step has been taken in the long (seemingly endless) journey to a U.K. crypto regulatory regime.”

Cattee added that recipients of the guidance, which is aimed at various market participants including cryptoasset firms and law firms advising on digital assets, “would do well to engage and take heed, and more broadly the U.K. will (eventually) not get too far behind Europe in being seen as a place for crypto firms to do business.”

Prospective recipients will have until the consultation closes on June 3, 2026, to voice any comments, concerns, or praise for its contents.

Meanwhile, the FCA also revealed—perhaps unsurprisingly—that this will not be the last pre-regime consultation, with the regulator still planning to consult on decentralized finance (DeFi) guidance, on operational resilience guidance for firms using distributed ledger technology (DLT), and on updates to the Financial Crime Guide relevant to digital currency firms.

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