According to FCA research, around 12% of UK adults now own, or have owned, crypto, up from just 4% in 2021. However, consumers are often exposed to risky firms and scams.
In October 2023, HM Treasury published detailed proposals for creating a UK financial services regulatory regime for cryptoassets, including stablecoin. It proposed bringing a wide range of cryptoasset activities, including exchanges and custody services, within the UK's financial services regulatory perimeter.
On 21 November 2024, the government confirmed that it would proceed with introducing this regime, broadly in line with the previously published proposals and the FCA published a roadmap in December 2024. The new regime will see the creation of new regulated activities such as operating a cryptoasset trading exchange and stablecoin issuance, as well as market abuse and admissions and disclosures regimes.
The government has now published for consultation a draft Statutory Instrument associated with the new regulated activities for cryptoassets, accompanied by an explanatory policy note.
- It amends the Financial Services and Markets Act 2000
(Regulated Activities) Order 2001 (RAO) to:
- define "qualifying cryptoassets" and "qualifying stablecoin" as the principal classes of cryptoassets to which the amendments apply;
- classify "qualifying cryptoassets" and "qualifying stablecoin" as specified investments under the Financial Services and Markets Act 2000 (FSMA); and
- specify certain activities related to these assets as regulated activities, so that persons carrying on those activities need to be authorised for that activity by the FCA.
- Amend FSMA as a consequence of the RAO amendments, in particular to set the geographic perimeter for the new regulated activities.
- Amend the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 to apply FSMA's regulatory framework to that included in the RAO.
- Make consequential amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to reflect the new regulatory perimeter.
- Make further consequential amendments to ensure that "qualifying stablecoin" backing assets are not considered either an alternative investment fund or collective investment scheme; and that there is a clear distinction between qualifying stablecoin and tokenised deposits, and electronic money, through an amendment to the Electronic Money Regulations 2011.
The government will publish statutory provisions for the market abuse and admissions and disclosures regimes in due course.
The consultation ends on 23 May 2025.
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