UK Will Regulate Cryptoassets From October 2027, Treasury Says

The U.K. government announced on Dec. 15, 2025 that it will bring cryptoassets into the regulated perimeter from October 2027 by extending the Financial Services and Markets Act framework to activities involving cryptocurrencies. A draft bill will be tabled in parliament this week, the Treasury said, setting a timetable for scrutiny and giving firms roughly 21 months to prepare for the new regime.

The Treasury framed the decision as a bid to strike a balance between encouraging innovation and curbing fraud. Finance minister Rachel Reeves said bringing crypto into the regulatory perimeter is "a crucial step in securing the UK’s position as a world leading financial centre in the digital age" and that clearer rules will help firms "invest, innovate and create high skilled jobs here in the UK."

Rather than creating a bespoke legal regime, ministers intend to fold specific crypto activities into existing financial services rules. The government said that approach will bring trading, custody and stablecoin activity under the same transparency and conduct standards applied to conventional financial products. Officials noted this route differs from the European Union’s bespoke Markets in Crypto assets regime and aligns more closely with U.S. regulatory practice.

Regulators will play a central role in shaping implementation. The Financial Conduct Authority will supervise cryptocurrency firms "in the same way as other providers of financial products," the Treasury said, and is expected to publish detailed crypto rules by 2026. The Bank of England will be involved in oversight of stablecoins and systemic risks, a division of responsibilities that assigns conduct and market regulation to the FCA while reserving prudential and systemic issues for the central bank.

The announcement builds on prior policy work, including an April 2025 draft order and policy note that set out how FSMA could be used to bring crypto activities into the regulated perimeter. The Treasury said the longer timetable to October 2027 reflects the need for firms to adapt and for regulators to finalise frameworks and operational rules before full implementation.

Industry reaction was cautious. An industry commentator identified as Morris urged care on pace and proportionality, warning that regulatory change must not come overnight. "Proportionality and pace are key" Morris said, adding that firms need time to adjust without being discouraged from operating in the U.K.

Market participants face a clear sequencing of next steps. Parliament will debate the draft bill in the coming months while the FCA’s rules expected in 2026 will set out operational requirements for transparency, custody arrangements and conduct. Firms should prepare for licensing, reporting and governance expectations consistent with existing financial services providers, but the precise definitions of regulated crypto activities and transitional arrangements will depend on the text of the bill and the FCA’s consultations.

Key questions remain unanswered in the announcement. The government did not publish the full draft bill, leaving open details on licensing thresholds, supervisory responsibilities, enforcement timelines and the treatment of emerging products. For investors and firms, the promise of legal clarity comes with the practical task of mapping current operations to a regulatory framework that will be defined over the next year.