Outputs from the FCA’s Introductory webinar: FSMA cryptoasset regime
For UK compliance professionals, crypto regulation has been “coming soon” since 2024. Consultations, draft statutory instruments and policy statements have dominated industry panels and board discussions.
Now, the direction is clear.
The FCA has confirmed that a full Financial Services and Markets Act (FSMA) cryptoasset regime is expected to commence on 25 October 2027. The shift from an anti-money laundering (MLR) registration framework to a full prudential and conduct regime marks a structural transformation in how cryptoasset firms will operate in the UK.
On 29th January, the FCA hold an Introductory webinar: FSMA cryptoasset regime, digging deeper on what’s expected and next steps. This article breaks down what that means practically and strategically for corporate compliance teams, and what needs to happen between now and go-live.
From AML Supervision to Full FSMA Regulation
The FCA has been explicit: this is not an incremental tightening of the existing MLR framework. It is a move into a comprehensive FSMA authorisation regime, aligned with the principle of “same risk, same regulatory outcome.”
That means crypto firms will be assessed against standards comparable to traditional financial services firms, including:
- Capital and prudential management
- Governance and SM&CR
- Client asset protection
- Market abuse controls
- Operational resilience
- Consumer Duty obligations
The commencement date, 25 October 2027, is the regulatory hard stop. After that, conducting regulated cryptoasset activity in the UK without permission will be unlawful.
The message from the FCA is consistent, firms must be “ready, willing and organised.”
What Activities Will Be Regulated?
The regime is activity-based and significantly broader than the current MLR perimeter. It is expected to capture:
- Issuance of qualifying stablecoins
- Cryptoasset custody
- Operating cryptoasset trading platforms
- Dealing in qualifying cryptoassets (principal or agent)
- Arranging deals in cryptoassets
- Staking
For compliance leaders, the key shift is that the perimeter analysis must now go beyond AML exposure. Boards need to reassess product lines, revenue streams and strategic plans against a future FSMA authorisation requirement.
The Timeline: 2026–2027 Will Move Fast
Although 2027 feels distant, the operational runway is shorter than it appears.
Key Dates
- Consultations close: February and March 2026
- PASS (Pre-Application Support Service) opens: July 2026
- Application period: 30 September 2026 – 28 February 2027
- Regime commencement: 25 October 2027
Firms operating in the UK are expected to submit applications within the defined application window. This window matters.
Saving vs Transitional Provisions: Why Timing Is Critical
Two statutory mechanisms will apply where firms are not fully authorised by go-live:
1. Saving Provision
Available to firms that apply during the application period, but whose applications are not yet determined by 25 October 2027.
These firms may continue conducting business, including new business, until a final decision is made.
2. Transitional Provision
Applies to firms that apply late or whose applications are unsuccessful.
These firms may service existing UK customers only, but cannot take on new UK business.
Both provisions are expected to run for two years, until October 2029.
For firms that do not apply at all, there is no safety net. They must run off their UK business before commencement or risk committing a criminal offence under FSMA.
From a compliance strategy perspective, this creates a clear board-level risk decision, apply early, or operate under severe commercial constraint.
The Gateway: A Broader Assessment Than Many Expect
The FCA has made clear that the authorisation gateway will be materially broader than the current MLR assessment.
Expect scrutiny across:
- Capital adequacy and liquidity
- Governance structures
- Senior Manager accountability
- Outsourcing frameworks
- Systems and controls
- Operational resilience
- Financial crime controls
- Market abuse surveillance
Importantly, there is no automatic transition from MLR registration to FSMA authorisation. Existing registered crypto firms must apply afresh. Existing FSMA-authorised firms must submit a Variation of Permission.
Applications will be assessed in order received. There is no priority lane for incumbents.
The FCA has also signalled that poor-quality or “shell” submissions may be rejected outright.
What This Means for Compliance Leaders Now
The compliance function is central to whether firms navigate this successfully.
Between now and mid-2026, firms should be:
- Conducting a Perimeter Review: Map all crypto-related activities against the forthcoming FSMA categories. Identify regulated touchpoints early.
- Reviewing Capital Planning: For many firms, regulatory capital will be a new requirement. Treasury and finance functions must be aligned with compliance.
- Defining Senior Manager Accountability: The SM&CR framework will apply. Clear allocation of responsibilities and fit-and-proper assessments must be in place.
- Stress-Testing Governance: Are committees structured appropriately? Is oversight demonstrable? Are conflicts managed effectively?
- Preparing for PASS Engagement: From July 2026, firms can engage with the FCA’s Pre-Application Support Service. While not mandatory, it is strategically prudent for most applicants.
This is not about having every control operational tomorrow. The FCA has acknowledged firms may not be fully ready immediately, but they must demonstrate a credible plan to be ready by commencement.
International Implications: EU and US Firms Take Note
Interest in the regime is global. The FCA reported participation from more than 70 countries in its January 2026 webinar.
Overseas firms currently accessing UK markets via the Section 21 financial promotions route will need to apply in their own right if undertaking regulated crypto activities. Reliance on promotional gateways will not suffice once the regime is live.
For EU and US firms servicing UK customers, this means:
- Evaluating direct authorisation
- Considering UK subsidiary structures
- Aligning governance to FSMA expectations
The UK is positioning itself as a high-standards jurisdiction. That may influence global regulatory convergence discussions in the years ahead.
The Strategic Question for 2026
Since 2024, the industry conversation has been about when full crypto regulation would arrive. That debate is over.
The real question for boards and compliance leaders is: Will your firm treat 2026 as a planning year, or as a countdown year?
Authorisation under FSMA is not a formality. It is a transformation in governance, prudential management and accountability.
Those who start early will shape their readiness. Those who delay may find themselves operating under transitional restrictions or forced run-off scenarios.
The FCA has been clear: this is the beginning of engagement, not the end.
How Leo RegTech can help
The FCA’s stated objective is to create an open, sustainable and competitive UK crypto sector that people can trust. In a market still working to repair reputational damage from global failures, regulatory clarity may become a strategic asset.
This marks a turning point for financial services. In this complex environment, a strong RegTech partner is not a luxury, it’s essential.
That’s where Leo comes in. Leo RegTech offers a cutting-edge platform designed to help firms navigate the intricacies of financial regulations, including those related to cryptoassets. Whether you need to ensure your financial promotions meet the FCA’s stringent requirements or manage client categorisation effectively, Leo provides the tools and support you need to stay ahead of the curve.
At Leo, we have more than 20 years of experience in delivering compliance excellence. We are internationally recognised, featuring in the RegTech 100 list, and have been named “Best Solution of Digital Transformation in Regulatory Compliance” by the European RegTech Insight Awards.
Contact us and see how Leo can help you streamline your compliance framework.
Sources and References
FCA Payments & Digital Assets Authorisations Webinar 29 January 2026.
