UK FCA to require crypto firms update permits under new FSMA authorization regime

The UK’s Financial Conduct Authority (FCA) launched a crypto license portal on Thursday, ahead of a comprehensive regulatory regime scheduled to take effect in 2027. The crypto licence portal represents a change from anti-money laundering registration to full authorization under the Financial Services and Markets Act 2000 (FSMA) for businesses looking to serve UK clients.

On 16 December last year, HM Treasury launched the latest version of the Financial Services and Markets Act 2000 (Regulation of Cryptoassets) 2025. In the final version of FSMA, the government made several significant alterations in response to market feedback, including clarifying key definitions and introducing new exclusions for certain activities.

In the new FCA report, the FSMA authorization requirement applies to companies registered under the MLRs. The FSMA authorization also applies to firms authorized by the Electronic Money Regulations of 2011 or the Payment Services Regulations of 2017.

In particular, companies that will be registered with the FCA under MLRs will need to secure authorization from the UK regulator under FSMA before the new regime commences, which is scheduled to take effect in 2027.

FCA mandates crypto firms update permits before the regime

The Financial Conduct Authority revealed that businesses that it has already authorized under the FSMA to engage in additional regulated activities must modify their current permits before the new regime takes effect. 

The UK markets regulator emphasized that crypto firms that now use the services of another FCA-authorized firm, known as an s.21 approver, to approve their final advertising will no longer be able to do so. The regulator instructed that these crypto companies will need new authorization.

The FCA has instructed that firms will be required to request a pre-application meeting with the Financial Regulator’s Pre-Application Support Service (PASS). 

The UK regulator has declared that the application period will last at least 28 days and must end at least 28 days prior to the new regime taking effect. FCA announced it expects the application period to open in September 2026.

Through a Treasury’s draft Statutory Instrument, the FCA will provide a facility for savings during the application period, enabling the company to continue offering cryptoasset services until its application is ultimately decided.

Cryptoasset companies will need to notify the FCA that they are utilizing the saving provision during the application period. Crypto firms will also be required to inform the FCA when they decide to stop using the saving provision as soon as it is reasonably possible following the full commencement date.  

The FCA cautioned that cryptocurrency companies may not obtain the necessary approvals in time if they apply after the application period but before the full regime starts. Crypto firms will automatically enter the transitional provision while their applications are being evaluated, in certain situations, when the new regime comes into effect.

FCA tests industry-led crypto disclosure standards through sandbox

On November 26 last year, the FCA accepted the RegTech platform Eunice into its Regulatory Sandbox to investigate an industry-led solution aimed at increasing the transparency of the UK’s cryptocurrency markets. 

Eunice assists companies, regulators, and financial institutions in navigating tokenized assets, cryptoassets, and on-chain infrastructure.  FCA reported that Eunice will develop and test a novel solution in the sandbox to reveal crucial information about cryptoassets in collaboration with some of the largest cryptoasset companies, including Coinbase, Crypto.com, and Kraken.

The UK financial regulator claimed that introducing Eunice will help make digital assets safer and more secure for UK investors by ensuring that buyers are aware of the risks before making a cryptocurrency purchase.

Luo said that Eunice will test the disclosure templates to maximize openness as part of the FCA’s Regulatory Sandbox. The FCA’s approach to the disclosure rules for cryptoassets will be influenced by the lessons learned from Eunice’s test.

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