On 29 April 2025, HM Treasury (HMT) published draft legislation, the
Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 (Order),
accompanied by a policy note.
The Order establishes the framework for the UK's new cryptoassets regulatory
regime, which will bring crypto exchanges, dealers and agents within the
regulatory perimeter. Subject to parliamentary approval and
parliamentary time, HMT intends to legislate for the new regime by the
end of the year.
Background
In November 2024, Tulip Siddiq, then Economic Secretary to the Treasury,
confirmed that the government would implement most of the proposals
published in October 2023 during the Sunak administration. However, it
has decided for now to not proceed with bringing stablecoins into UK
payments regulation.
Key points to note
-
There are two commencement dates. On the initial commencement
date, the FCA and PRA will be given the power to issue directions,
guidance and rules so that they can operationalise the new regime.
Full commencement will take place on a later date, which will be set
out in the final Order.
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The Order creates new categories of specified investments
(qualifying cryptoasset, qualifying stablecoin and specified
investment cryptoasset) and specified activities for cryptoassets
(stablecoin issuance, safeguarding, operating a qualifying
cryptoasset trading platform, dealing in qualifying cryptoassets as
principal and agent, arranging deals in qualifying cryptoassets, and
qualifying cryptoassets staking).
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The territorial application of the Financial Services and Markets Act 2000 (FSMA) will be amended to make sure that cryptoassets firms that service UK retail customers are required to be authorised in the UK, wherever they are located.
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There are no provisions in the Order for decentralised finance.
Where specified activities are being carried out on a truly
decentralised basis, ie where there is no person that could be seen
to be undertaking the activity by way of business, then the requirement to be authorised will not be applicable. The FCA will
determine in any given case whether there is a sufficiently
controlling party or parties that ought to be subject to the
requirement to be authorised in accordance with section 19 of
FSMA.
-
The Order makes a number of consequential amendments to other
secondary legislation, including existing financial promotion and
anti-money laundering requirements for cryptoasset firms.
-
Market abuse and admissions and disclosures provisions will be
published "in due course."
Help is at hand
If have any questions about the regulatory regime for cryptoassets, please
let us know.
