A draft legislation published Due to the UK Treasury on April 29, new rules revealed for companies that offer crypto services in the UK, such as Stablecoins, deployments and guardianship.
The rules, part of the wider ‘Plan for Change’ of the government, are intended to bring crypto fairs, dealers and preservators under the supervision of the Financial Conduct Authority (FCA), reflecting the standards that are applied to traditional financial services.
Chancellor of the treasury Rachel Reeves said that the legal changes are aimed at ‘Great Britain the best place in the world to innovate’. She added that robust rules around crypto will stimulate the trust of investors, support growth and protect the British investors.
Expansion of the perimeter of the regulations
According to the Order 2000 (amendment) Order 2025 of the draft Financial Services and Markets, companies involved in Crypto will need authorization to operate in or serve customers in the UK.
The Regulation will introduce a new category “qualifying cryptoassets” and determine clear definitions for “qualifying stablecoins”, which distinguishes them from electronic money and tokenized deposits.
These classifications ensure that crypto activities are subject to the same supervision as other specified investments under existing financial services legislation.
The new activities that require authorization include issuing stablecoins, custody, operational trading platforms, acting in crypto as director or agent, arranging crypto transactions and offering strike services.
The policy memorandum clarifies that the use of Stablecoins for payments will not grant them a regulation under the regulations for payment services, so that the future regulation remains open as adoption increases.
The geographical scope of the new regulatory circumference ensures that companies that are directly or indirectly employed by British consumers must obtain authorization, regardless of their location. In addition, fIRMs who provide custody or deployment services must also be authorized if they are active in the UK or on behalf of British consumers.
Stablecoin expenditure should only obtain authorization if they work from an institution within the United Kingdom. The treasury notes that real Defi activities, where there is no identifiable controlling party, would fall outside the authorization requirements.
Implications for financial advertisements and AML rules
The draft legislation will also revise the Financial Promotion Order 2005. Crypto companies that are authorized under the new regime can approve their own promotions, which allocated temporary provisions to those registered but unauthorized companies to do this.
According to the design, this coordinates the regulatory treatment of crypto promotions with those of traditional financial services.
Further changes will update money, terrorist financing and transfer of fund regulations 2017.
Authorized crypto companies no longer need separate registration under anti-money laundry practices (AML) regulations, but must still fully meet the existing AML requirements. Companies must inform the FCA when they start or stop activities that fall under the new regime.
Timeline for implementation
The Authority Financial Conduct will set up an application window before the entire start to allow existing cryptoasset companies to request permission.
Companies that cannot guarantee the authorization within the transition period will take effect a winddown process of two years, where they can maintain existing contracts, but all new business activities in which British consumers are involved must stop.
The Treasury stated that the last legislation will be put forward “at the earliest chance”, with a final strategy for growth in financial services and competitiveness that is planned for publication on July 15.
Discussions with American counterparts about promoting cross-border cooperation in the field of digital effects are also underway as part of wider Fintech development initiatives.