The final bill largely inherits the core architecture discussed in April, leaving the list of newly regulated activities essentially unchanged. However, a number of important changes have been made, including clarifications regarding definitions and the addition of new provisions governing the public offering, disclosure, and market abuse of cryptoassets.
At the same time, the Financial Conduct Authority (FCA) has published three consultation papers on the regulation of crypto-asset activities, the crypto-asset admission and disclosure and market abuse regime, and the crypto-asset corporate prudential regime. We will discuss these in another blog post.
Overview of the new system
The Financial Services and Markets Act 2000 (Crypto Assets) Draft Regulations 2025 (CRAO) sets out the legal basis for the FCA to regulate various activities in the UK in relation to ‘eligible crypto assets’ and ‘eligible stablecoins’.
Regulated activities and exclusions
The CRAO amends the existing Financial Services and Markets Act (Regulated Activities) Order 2001 to provide for new regulated activities, including: Protection of Eligible Crypto Assets and Certain Related Investment Crypto Assets. Operate a qualified crypto asset trading platform. Treat eligible crypto assets as a principal or agent. Arrange trading of eligible crypto assets. and eligible crypto asset staking.
The definition of “eligible stablecoin issuance” has been revised. Companies are currently required to carry out all of the following activities from their UK premises: (i) offers (or arranging offers) of eligible stablecoins made by (or on behalf of) the offeror or a member of its group; (ii) redemption of such Eligible Stablecoins; (iii) maintaining the value of eligible stablecoins (such as by holding fiat currency or other assets); Only mints are expressly excluded from publication.
In addition to amending existing exemptions, the final bill also introduces new exemptions, including activities conducted for the purpose of “selling goods or providing services.” Additional activity-specific exclusions apply. For example, it applies to transactions/arrangements where crypto assets are acquired or transferred free of charge or where distribution occurs as a reward for the protocol.
territorial range
The CRAO amends FSMA section 418 to set out a clear UK nexus test for crypto asset activity. It’s designed to help companies keep track of their key activities in the UK, even if they have overseas offices. Businesses providing crypto- and stablecoin-related services to UK customers will be subject to the new rules, even if they are based overseas. However, carve-outs apply to some companies, such as those that trade exclusively with institutional investors or those that operate through licensed intermediaries.
Cryptoasset approval and disclosure system
New provisions included in the final bill create designated activities for the public offering of eligible cryptoassets and the permitting of trading in eligible cryptoassets. The rules also apply to related disclosures. Exemptions apply in limited circumstances.
The new Designated Activities Regime governs the public offering of eligible crypto assets and the permitting of trading on eligible crypto asset trading platforms, replacing the previous Financial Facilitation Order (FPO) exemption for crypto assets with a dedicated framework. Public offerings into the UK are generally prohibited unless an exception applies (e.g. small offers of up to £1,000,000, offers to accredited investors only, offers to fewer than 150 people, minimum of £100,000 per investor, or offers of eligible stablecoins by authorized issuers). The FCA may make specified operating rules regarding disclosure and liability. If an offeror relies on an exemption, the material information provided to a prospective buyer must be incorporated into the applicable disclosure document or disclosed to viewers of the offer.
The FCA may set the content, liability and form requirements for disclosure documents through specified activity rules, and those responsible for such documents will face civil liability for false or misleading statements or necessary omissions, subject to the blanket exemption and protected forward-looking statement safe harbor defined in the FCA rules. Buyers may have a right of withdrawal through FCA rules, but there are consequences for non-compliance.
Market abuse system for crypto assets
Cryptocurrency-specific market abuse regulations apply to related eligible cryptoassets and related instruments that are authorized to be traded or are seeking authorization to trade, and reflect well-known MAR concepts such as inside information, insider trading, unlawful disclosure, and market manipulation. Covered businesses must have systems and procedures in place to prevent, detect, and deter fraud. Notify your trading platform of suspicious orders/transactions. Maintain an insider list. Comply with information sharing regulations under FCA rules. The FCA may specify legal crypto asset market practices and set detailed rule requirements.
consequential changes
The CRAO makes consequential amendments to existing anti-money laundering and financial promotion requirements for crypto-asset companies to reflect the new regulatory boundaries.
In addition to changes to the FPO to recognize crypto disclosure documents (see above), these consequential amendments include: (i) the exclusion of the regulated issuance of covered stablecoins from payment services under the Payment Services Regulations 2017; (ii) amending the definition of “currency value” in the Electronic Money Regulations 2011 to exclude stablecoins and their underlying assets; (iii) amendments to the Funds Act to exclude certain qualifying stablecoin “backing” arrangements from the composition of alternative investment funds and collective investment schemes, subject to conditions (e.g. no interest or yield to holders); (iv) amendments to the money laundering regulations that comply with the new authorization boundary and require authorized firms and certain investment cryptoasset firms to notify the FCA when acting as cryptoasset exchanges or custodian wallet providers;
Transition and savings provisions
Transitional arrangements will allow companies to apply for a license from the FCA before the start date of the scheme and continue to provide services while their application is considered, although applications may be made outside that period. The savings provisions apply to applicants who apply within the relevant application period and whose CRAO commencement date remains undetermined. Applicants may continue in a pre-go live position for up to two years.
next step
The timeline is now fixed. Parliamentary approval is expected in 2026, after which the government is expected to take office on October 25, 2027.
The FCA and the Prudential Regulation Authority are empowered under the CRAO to consult and develop specified operating rules and general rules in advance of the operational date.
Stay tuned for blog posts in the coming days regarding the recently published FCA consultation document. Also join us in January for a series of webinars that delve deeper into the details of the UK’s new crypto regime.
