The U.K.’s crypto industry has just over 12 months to prepare for an even stricter regulatory regime, a senior official with the country’s finance regulator said.
STORY CONTINUES BELOW
Matthew Long, director of payments and digital assets at the U.K.’s Financial Conduct Authority (FCA), told CoinDesk in an interview that the “impending gateway regime” that is earmarked for 2026 will in fact be a new authorization regime for crypto companies.
“We will have a gateway which will allow authorization. But obviously we’ve got to go through those consultations, create those rules and get the legislation for that to take place,” Long said.
This regime will be a leap from the current anti-money laundering (AML) one. Firms like crypto exchanges Coinbase, Gemini and Bitpanda will move away from just needing to register with the country to comply with anti-money laundering rules to an authorization regime with rules for a suite of offerings. This will require them to go through a fresh process to secure approval from the FCA.
The FCA intends to release papers on stablecoins, trading platforms, staking, prudential crypto exposure and more this year. The regime is expected to go live after final policy papers are published in 2026, Long said.
Since its anti-money laundering register for firms opened in 2020, the FCA received 368 applications from firms wishing to comply, but only 50 firms — 14% of applicants — have been approved so far. Many firms may have to start again.
Read more: U.K. Financial Regulator Aims for Crypto Regime by 2026
Upcoming legislation will define what counts as a regulated activity, the FCA’s Long said. Companies that engage in those activities will need to seek authorization.
In 2023 the former U.K. government released papers that said regulated activities would likely include crypto and fiat-referenced stablecoins issuance as well as payment, exchange and lending activities.
Stablecoins will no longer be brought under the U.K. payments regulations as set out in previous work, former Economic Secretary Tulip Siddiq said in November. The FCA plans to consult on draft rules for stablecoins early this year.
“What we’re doing in terms of the stablecoins is we’re making sure that we take the best from the current regulation that exists in TradFi, but stablecoins are ultimately unique,” Long said. “There isn’t anything that is exactly the same. We’ve got to adapt the regulation that we’ve currently got.”
Read more: UK to Draft a Regulatory Framework for Crypto, Stablecoins Early Next Year
The FCA is still deciding on the process crypto companies will need to go through to get authorized, Long said.
Long added that it was undecided what steps those who are already registered in the money laundering regime will need to take but the new regime will come with wider permissions,” so we’d expect that if you wanted the further permissions, you’d apply for them.”
Therefore companies may need to go through a lengthy registration process — even if they’ve already secured an existing license.
“We’ll be communicating with firms about what the gateway will look like before it goes live, our intention is to bring it live as soon as humanly possible,” Long said referring to the authorization regime.
In formulating how it intends to move forward, the regulator plans to also look at Europe which has launched bespoke legislation for the crypto sector and the International Organization of Securities Commissions’ 18 recommendations. IOSCO will soon be publishing a piece on how countries are progressing with its standards, someone familiar with the matter said.
“It’s a case of understanding and looking for best practice,” Long said.
Read more: UK Crypto Firms and Regulator Blame Each Other for Industry Exodus
