The FCA sets out pathway for cryptoasset firm authorisation

Regulated regime for cryptoasset service providers

The FCA has confirmed that the UK cryptoasset sector will be moving away from the current anti-money laundering registration framework and into a full FSMA authorisation-based regulatory regime. This represents a significant shift in regulatory expectations, bringing cryptoasset firms much closer to the standards applied across traditional financial services.

The FCA has been clear that firms should begin preparing now. Applicants will need to demonstrate that they are “ready, willing and organised”, supported by a credible and evidenced plan for compliance, governance and operational delivery.

Timeline for implementation

The FCA has set out a number of key milestones as the new regime approaches.

From July 2026, the FCA intends to launch a Pre-Application Support Service (PASS). This will provide early regulatory steering for firms considering authorisation. PASS is intended to help applicants understand FCA expectations and submit higher-quality applications. Participation is not mandatory, and firms may have more than one meeting.

The FCA has indicated that it will expect firms to be able to clearly explain their proposed business model and activities. While this does not require an exhaustive submission at this stage, firms should be prepared to discuss risks, governance, funding, operating arrangements and readiness timelines.

The FCA expects firms already conducting relevant UK cryptoasset business, including those currently registered under the MLRs, to submit authorisation applications within the window running from 30 September 2026 to 28 February 2027.

The new regime is expected to commence on 25 October 2027, subject to the statutory instrument progressing through Parliament.

FCA approach to authorisation assessment

The FCA has stated that it will endeavour to determine applications submitted during the application window ahead of the October 2027 go-live date. However, it cannot guarantee that all applications will be concluded in time, as certain factors may sit outside the FCA’s control.

In practice, authorisation processes are often delayed where firms are not yet operationally ready. Common reasons include capital not being fully raised or confirmed, third-party arrangements such as custody or safeguarding not being finalised, senior management roles remaining unfilled, or governance and systems not yet embedded.

Applications most commonly fail not because the business model is innovative, but because accountability is unclear, risks are poorly explained, or controls are not sufficiently evidenced.

Saving and transitional provisions

The legislation also provides mechanisms intended to manage firms’ position when the new regime goes live.

Firms that apply within the application window, but whose applications are not yet determined at commencement, may benefit from the Saving Provision, allowing them to continue operating while the FCA completes its assessment.

Firms that apply after the application window may fall within the Transitional Provision, under which they may continue servicing existing customers but cannot take on new business.

Firms whose applications are refused or withdrawn will need to run off their UK business. Firms that do not apply at all must cease regulated activity at commencement. The FCA has also warned that incomplete or “shell” applications may be rejected and may not secure access to these protections.

How we can assist

FM Legal provides a full-service authorisation service for cryptoasset firms, including advice on regulatory permissions, preparation of the regulatory business plan, and implementation of governance, risk and compliance frameworks required under the new regime. Please contact our team for further information.