On 29 April, UK Chancellor Rachel Reeves announced the publication by HM Treasury of near-final legislation to bring cryptoassets within the scope of the UK’s regulatory perimeter. Shortly after, on 2 May, the UK Financial Conduct Authority (FCA) also published a discussion paper (DP25/1) seeking views on its approach to regulating cryptoasset trading platforms, intermediaries, cryptoasset lending and borrowing, staking, decentralised finance (DeFi), and the use of credit to purchase cryptoassets.

The draft legislation, titled the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 (the Cryptoassets Order), and DP25/1 follow, and are closely aligned with, HM Treasury’s consultation and subsequent response on the future financial services regulatory framework for cryptoassets in the UK, which were each published in 2023.

The Cryptoassets Order

The Cryptoassets Order has been published in draft form to allow stakeholders to make technical comments. HM Treasury has stated, however, that the policy behind the Cryptoassets Order is settled and will not change. 

The Cryptoassets Order amends a number of pieces of existing legislation to bring certain activities relating to cryptoassets within the UK’s regulatory perimeter. More specifically, and among other things, the Cryptoassets Order:

• amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO) to include new specified activities and specified investments relating to cryptoassets. Any person undertaking such activities in the UK will, therefore, need to be authorised by the FCA or benefit from an exemption to carry on such activities. Such specified activities include:
  • issuing qualifying stablecoins in the UK;
  • safeguarding (custody) of qualifying cryptoassets;
  • operating a qualifying cryptoasset trading platform;
  • dealing in qualifying cryptoassets as principal, which is intended to include lending and borrowing services;
  • dealing in qualifying cryptoassets as an agent;
  • arranging deals in qualifying cryptoassets, which is intended to include operating a cryptoasset lending platform; and
  • making arrangements for qualifying cryptoasset staking;
• amends the Financial Services and Markets Act 2000 (FSMA), in particular to establish the geographic perimeter for the new regulated activities. The geographical scope of the new regulated activities can vary depending on the specific activity, but generally, firms providing any such services to UK retail customers will need to be authorised in the UK;
• amends the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 to ensure alignment with the updated FSMA regulatory framework and the RAO; and
• amends the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) to reflect the new regulatory perimeter. Notably, firms authorised by the FCA for the new cryptoasset activities will not be required to additionally register as “cryptoasset exchange providers” or “custodian wallet providers” under the MLRs, but will still be subject to the non-registration requirements thereunder.

The Cryptoassets Order also provides for a transitional period, to be determined by the FCA, during which firms can apply to the FCA for authorisation to conduct the new regulated activities (or to apply for a variation of permission, if the firm is already FCA authorised to undertake non-cryptoasset activities).

DP25/1 

DP25/1 seeks views on how the FCA should regulate the following entities and activities, and sets out key policy proposals in relation to each:

• Cryptoasset trading platforms. These are entities that will be authorised to operate a qualifying cryptoasset trading platform pursuant to the Cryptoassets Order;
• Intermediaries. This includes entities that will be authorised to deal in qualifying cryptoassets as principal, deal in qualifying cryptoassets as agent and/or arrange deals in qualifying cryptoassets;
• Cryptoasset lending and cryptoasset borrowing. This includes operating a cryptoasset lending platform, which, while not itself a specific regulated activity, will be covered by the other new regulated activities, including arranging deals in qualifying cryptoassets;
• Restricting the use of credit to buy cryptoassets. The FCA is exploring whether to restrict firms from accepting credit as a means for consumers to buy cryptoassets. However, the FCA expects that qualifying stablecoins issued by an FCA-authorised stablecoin issuer will not be subject to such restrictions;
• Staking. The FCA aims to address technological, customer understanding and safeguarding risks related to staking; and
• DeFi. DeFi activities are not covered by the new Cryptoasset Order regime where they are truly decentralised. However, when DeFi involves the proposed regulated activities, and where there is a clear controlling person(s) carrying on an activity, then such activities will be covered. The FCA provides the example of services involving an identifiable intermediary or entity controlling business operations and product features.

Next Steps

Technical comments on the Cryptoassets Order can be submitted to HM Treasury until 23 May 2025. HM Treasury intends to legislate for the new cryptoassets regulatory regime by the end of the year, subject to Parliamentary time allowing.

Feedback on DP25/1 has been requested by 13 June 2025. If any proposals in DP25/1 are adopted as part of the FCA’s final rules, the FCA will consult on them.

The Cryptoassets Order and DP25/1 are available here and here, respectively. 

More information on HM Treasury’s 2023 consultation and response is available here.