UK’s FCA Confirms Plan For Crypto Regulation By 2026

The roadmap and timelines to regulate the cryptocurrency industry has been outlined this week by the UK’s financial regulator.

The Financial Conduct Authority (FCA) said on Tuesday that “crypto remains largely unregulated in the UK and high-risk. If something goes wrong, it is unlikely you will be protected so you should be prepared to lose all your money.”

It then outlined its ‘roadmap’ for regulation of the sector and provided a timeline detailing key dates and milestones, with the regulatory regime expected to go live in 2026.

Crypto regulation roadmap

According to the FCA, the average value of crypto held by people increased from £1,595 in August 2023 to £1,842 in August 2024, and only 1 in 10 people say they did not do any research before buying crypto.

“Around a third of people said they believed they could raise a complaint with the FCA if something went wrong and were seeking recourse or financial protection,” the regulator stated. “Currently, crypto remains largely unregulated in the UK and high-risk. If something goes wrong, it is unlikely you will be protected so you should be prepared to lose all your money.”

Matthew Long, director of payments and digital assets at the FCA in a blog post noted that earlier this year the FCA had brought together over 100 organisations involved in the industry, including crypto exchanges, banks, trading firms, blockchain analytics companies, law firms, industry associations and universities.

Long pointed out that government officials, academics and other regulatory authorities including the Treasury and Bank of England, and the US Securities and Exchange Commission also joined to share their views.

“We’d like to thank everyone who took the time to join us and share their thoughts and experiences,” wrote Long. “These discussions are just the beginning of the extensive engagement we’ll need with stakeholders across the board to get the rules right.”

Regulatory timeline

So what will be the UK’s timeline for implementing a regulatory regime for the crypto sector?

In the fourth quarter, the FCA said it will launch discussion papers on the rules governing the issuance and custody of stablecoins, as well as admission and disclosure processes and how to tackle market abuse.

In the first half of 2025, the FCA said it plans to launch papers on trading platforms, intermediation, lending, prudential crypto exposure and so-called staking rewards offered by firms on users’ token holdings.

By 2026, the FCA said that a full regime governing cryptoassets will go live in the UK following the publication of final policy statements that same year.

“Our research results highlight the need for clear regulation that supports a safe, competitive, and sustainable crypto sector in the UK,” stated Matthew Long.

“We want to develop a sector that embraces innovation and is underpinned by market integrity and consumer trust,” said Long. “’We’re committed to working closely with the Government, international partners, industry and consumers to help us get the future rules right.”

Long time coming

The UK has been plotting how best to regulate the crypto sector for a while now.

The UK had launched a consultation on crypto regulation in early 2021 that was mostly focused on stablecoins.

Then in April 2021 the Bank of England set up a taskforce to look at the case for a new “Britcoin”, or central bank-backed digital currency.

In December 2022 it was reported that HM Treasury was finalising sweeping new powers for Financial Conduct Authority to properly regulate the cryptocurrency industry.

This included limits on foreign companies selling into the UK, provisions for how to deal with the collapse of companies, and restrictions on the advertising of products.

The UK is not alone in seeking to regulate the crypto sector.

Also in 2022 the Biden administration released an initial framework for future regulation of cryptocurrencies and other digital assets, to minimise their potential risks while encouraging private sector innovation and international co-operation.