In this post we analyse the now finalised Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 (the Cryptoasset Regulations), which will bring various cryptoasset activities within the UK regulatory perimeter for the first time. This post considers the nine new regulated activities, their territorial scope, the new designated activities regime for public offers and market abuse and the transitional provisions for market participants. The Cryptoasset Regulations establish the legislative framework, but they will be supplemented by additional FCA rules which the FCA will consult on over the course of 2026. We will address each of the recently published FCA consultation papers in subsequent blog posts.
The Cryptoasset Regulations are the final form of the April 2025 draft statutory instrument (draft SI) that we analysed in our client briefing (available here). In short, the provisions amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO) are broadly the same as in the draft SI, but there are a number of additional provisions in the Cryptoasset Regulations – public offers and admission to trading, and market abuse provisions, utilising the FCA’s powers in relation to designated activities.
This is the second in our series of posts examining the FCA's latest proposals for the regulation of cryptoassets in the UK. See our first post, highlighting notable policy decisions underlying the proposed regime, here.
Regulated cryptoasset activities
Once in force, the Cryptoasset Regulations will create nine new regulated cryptoasset activities by amending the RAO – which have been taken forward from the draft SI:
- Operating a qualifying CATP;
- Dealing in qualifying cryptoassets as principal;
- Dealing in qualifying cryptoassets as agent;
- Arranging deals in qualifying cryptoassets;
- Making arrangements with a view to transactions in qualifying cryptoassets;
- Safeguarding qualifying cryptoassets and relevant specified investment cryptoassets;
- Arranging for another person to safeguard qualifying cryptoassets or relevant specified investment cryptoassets;
- Arranging qualifying cryptoasset staking; and
- Issuing qualifying stablecoin in the UK.
The key definitions from the draft SI have been carried forward, including the definitions of “qualifying cryptoassets”, “qualifying stablecoins” and “specified investment cryptoassets”.
Territorial scope
The Cryptoasset Regulations broadly maintain the territorial scope proposed in the draft SI. The starting point, as for any regulated activity, is that it is necessary to consider whether any activities are carried on “in the UK”. The precise territorial scope will depend on which cryptoasset activity is undertaken by a firm (see our client briefing for a more comprehensive overview as the approach in the Cryptoasset Regulations has not changed significantly from the draft SI).
One interesting change to the draft SI which is relevant to territorial approach is to the activity of issuance of qualifying stablecoins. Previously, article 9M of the draft SI expressly referred to persons established in the UK and to several types of activity (any of which could be carried on); the initial language proposed in the draft SI suggested it was possible that the stablecoin could have been created by a member of its group. Article 9M(2) of the finalised Cryptoasset Regulations now provides that in order to be considered to be issuing a qualifying stablecoin, all three limbs of the definition must be carried on. Two of the limbs (offering or arranging for another to offer a qualifying stablecoin for sale or subscription, redemptions and holding backing assets) which comprise the issuance of a qualifying stablecoin must be individually linked to “an establishment in the UK”. HM Treasury’s paper indicates that “[t]here are three components to this activity, which are: offering, redemption, and maintaining the value of the qualifying stablecoin. Undertaking any one of these three activities from an establishment in the UK for qualifying stablecoin will bring firms within the regulatory perimeter for issuance.” However, this is not how article 9(2) is currently drafted – nor is it consistent with the amendments to s418 of FSMA, which provide that the new ninth case where activities are to be regarded as being carried on in the UK is where all of the activities in article 9M(2)(a) to (c) are carried on by A (or behalf of A) in the UK.
The Cryptoasset Regulations also maintain the position in the draft SI where s418 FSMA is extended to cover certain other types of cryptoasset activity provided to UK consumers, where no person authorised under Part 4A of FSMA to carry on the relevant activity is involved. The UK Government’s clear intention is to ensure that cryptoasset firms serving UK retail customers should be authorised in the UK.
Finally, the Cryptoasset Regulations do not apply the overseas person exclusion to qualifying stablecoin issuance or any of the other regulated cryptoasset activities. That (deliberate) omission suggests that offshore firms will need to carefully assess their regulated activities and whether they are carried on “in the UK” (assuming no other exemptions or exclusions are available).
Part 5A designated activities
Additionally, the Cryptoasset Regulations establish designated activities under Part 5A FSMA in relation to public offers of qualifying cryptoassets, admissions to trading, use and disclosure of inside information and market manipulation. These provisions were not specifically set out in the April 2025 draft but are now included in full. The Cryptoasset Regulations establish liability for non-compliance with the related disclosure rules and grant the FCA the power to make rules designating liability for misleading statements and omissions. These proposals are explained more comprehensively in the relevant consultation paper which we will cover in a subsequent post.
Transitional provisions
Firms already carrying on cryptoasset activities that would be regulated once the regime is in force should take note of the saving and transitional provisions that will be established under the Cryptoasset Regulations. The saving provision will apply to persons who have applied for a relevant cryptoasset permission during the relevant application period where the application has either not yet been determined or it has been refused but is open to review. Such persons (and overseas persons in their group), before 25 October 2029, will be treated as though the amendments to the RAO, FSMA, the Financial Promotions Order and other secondary legislation have not yet come into force, provided they have notified the FCA.
There is also a transitional provision, which is intended to act as a regime for running-off and exiting UK cryptoasset business. The transitional regime will be available to firms where their application has been refused by the FCA (and is no longer open to review), where it has been withdrawn or where the person applied outside the relevant application window and the application has not been determined. Effectively, there will be an exemption from the General Prohibition in s19 of FSMA for such firms (and for firms which are already authorised persons, also an exemption from s20 of FSMA (authorised persons acting without permission)). The exemption will only cover the new cryptoasset regulated activities and within this only to the extent necessary for the performance of a pre-existing contract entered into before the firm entered the transitional provision.