Crypto Roadmap - crypto regulatory regime goes live in 2026

Two important updates on the next steps for UK crypto regulation have been published:

• Tulip Siddiq MP has set out the government's approach to cryptoasset regulation in a keynote address at the 'Tokenisation Summit: UK government's approach to tokenisation and regulation' where she also discussed initiatives including the Digital Securities Sandbox and the issuance of a digital gilt instrument (DIGIT) announced in the Mansion House speech on 14 November 2024 (see our blog post on Mansion House here).
• The FCA has published a blog post on how stakeholder roundtables have helped shape its approach to regulating certain areas of crypto, and an indicative roadmap of key dates for the development and introduction of the UK’s crypto regime.  The FCA has also published a research report on consumer attitudes and behaviours towards crypto.

These publications provide the long-awaited next steps on the development of a UK crypto regulatory regime. It is welcome news for the industry which has been seeking clarity on timing since the last update published by HM Treasury in October 2023 (see our briefing here), and since the new government came into power in the summer.  And although much of the detail will be in the upcoming draft legislation and FCA papers, the industry will now be able to start planning.

We set out below some key takeaways from the latest government and FCA updates:

Approach to regulation: The government plans to implement the HMT proposals 'in full', including the creation of various new regulated activities for cryptoassets (eg operating a cryptoasset trading platform and associated regimes for admission to trading and market abuse – see our summaries of the HMT proposals in February 2023 and October 2023), but the regulatory treatment of fiat-referenced stablecoins has changed (see below).

Same timetable for both stablecoin and the wider cryptoasset regulatory regime: The government has rejected the phased approach to cryptoasset regulation previously proposed by HM Treasury, whereby fiat-backed stablecoins used in payments would be regulated first (Phase 1), with the regulation of the wider cryptoasset industry to follow (Phase 2).

Instead, the government intends to proceed with the regulation of stablecoin at the same time as the rest of the regulatory regime for cryptoassets.

Regulatory treatment of stablecoins:

• This regulation of stablecoin is still expected to involve the creation of a new FCA regulated activity under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) for the issuance of fiat-backed stablecoins which are issued in the UK. The FCA plans to consult on the management of backing assets and redemption of stablecoins in Q1/Q2 2025.
• The custody framework will apply to both stablecoins and the broader perimeter of cryptoassets at the same time.
• The government does not intend to bring stablecoin into UK payments regulation as this approach would have placed additional regulatory burdens on certain stablecoin activities in a way that would not be proportionate based on the current use cases.

Cryptoasset staking services do not constitute collective investment schemes: The government plans to remove the current legal uncertainty in this area. HM Treasury plans to engage firms on draft legal provisions for the cryptoasset regime including stablecoins 'as early as possible next year' and the FCA plans to publish a discussion paper on staking in Q1/Q2 2025 and a consultation paper in Q4 2025 – Q1 2026.

Crypto regulation starts in 2026: The FCA Roadmap envisages that the new regulatory regime, including the authorisation gateway, will be in place in 2026. Given final FCA rules will only be published, and the authorisation gateway opens, in 2026, it is likely that the new crypto regime will only start to apply towards the latter half of 2026. Cryptoasset firms must start planning and engage with the detail when draft legislation and FCA papers are published.

FCA Crypto Roadmap