Risky Business: Brokers And Platforms In The UK's Crypto Regime

This article analyses and compares the commercial costs and benefits of offering services via on-platform trading in cryptoassets as operators of cryptoasset trading platforms (CATPs) and via over-the-counter activities as cryptoasset brokers.

Once the UK's draft regime regulating the conduct of certain activities in "qualifying cryptoassets" takes effect, firms offering particular services in the UK will need to decide whether to do so as a trading platform or a broker. Both are permitted options, but these are often pursued separately (and future crypto regulation in the UK might make them mutually exclusive).

This article was first published in the November 2025 issue of Butterworths Journal of International Banking and Financial Law.

Where are we now? The draft UK crypto regime

The UK's regulatory regime governing activities in cryptoassets is largely in draft form. While certain activities relating to cryptoassets are subject to registration requirements under the UK's money laundering regulations, authorisation from the FCA is not currently required for activities in cryptoassets which do not constitute existing regulated financial instruments (eg derivatives). That will all change once the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 (the Draft Crypto Order) comes into effect.

Following initial proposals in 2023, HM Treasury (HMT) published the Draft Crypto Order for the UK government in April 2025. This sets out amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), among other pieces of legislation, assigning certain crypto-related activities as "specified activities" and so bringing them within scope of the "general prohibition" established by s 19 of the Financial Services and Markets Act 2000 (FSMA). This means that conducting these activities without being authorised or exempt under FSMA will become subject to the same consequences as conducting banking and investment (and other) activities without a licence: the person commits a criminal offence; related contracts would be void and unenforceable; and the other party is entitled to recover from the offender any money or property transferred along with compensation for any loss sustained by that other person as a result of the transfer.

The result is that those who want to perform activities that will be regulated once the Draft Crypto Order comes into effect, and who do so by way of business in the UK, will need to be authorised or exempt under FSMA. With authorisation and exemption come obligations – specifically, obligations to comply with the FCA's rules. Some of those rules are currently in draft form, with further publications expected in the coming months. The full form of the regime is not yet clear, and the FCA is using as a guide in developing its rules in this space the principle of "same risk, same regulatory outcome". However, based on the draft legislation and FCA rules, aspects of the regulatory burden of conducting a regulated cryptoasset business in the UK are expected to be more onerous than the burden on authorised persons offering equivalent traditional financial services.

Key points

• The UK's draft regulatory regime for cryptoassets creates a complex range of interconnecting commercial incentives and costs for firms that will provide relevant services to customers in the UK.
• At the most basic level, the regime would generally require firms conducting a range of specified activities in the UK in particular types of cryptoassets to obtain authorisation from the UK's Financial Conduct Authority (FCA) to avoid criminal liability, void and unenforceable contracts, and potential compensation claims. However, firms regulated under this regime will face the FCA's often conservative expectations, imposing significant operational and compliance burdens that go beyond the regime applicable to providers of equivalent financial services in traditional asset classes.
• The scope of activities expected to be regulated under this regime will include, among others, firms operating CATPs and those operating as brokers (defined below). The permitted business models available to these types of firms are likely to be curtailed by both legislation and the FCA's rules.
• On the one hand, CATPs would only be permitted to operate non-discretionary trading platforms (e.g., order book venues), forcing global CATPs with trading models containing a discretionary element to either alter their operations or split liquidity pools, impacting business strategy and market access. Further, existing recognised investment exchanges cannot use their exempt status to operate a CATP, requiring separate subsidiaries with distinct capital and operations, thereby increasing costs and complexity.
• That said, it is arguably brokers who will receive a worse deal, as various aspects of the FCA's rules will force them to operate in a way that is subordinate to, and likely overshadowed by, the role of authorised CATPs. For example, authorised brokers would beobliged to source prices for UK retail clients from at least three UK CATPs and to execute orders for UK consumers on a UK CATP.
• Finally, even firms operating from outside the UK and intending to avoid its regulatory regime are not entirely free from risk: draft legislation deems their activity to come into scope if they conduct certain activities—directly or indirectly—with UK consumers.

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