UK Sets Crypto Licensing Rules as Treasury Plans to Exempt Some Stablecoin Payments

The UK’s Financial Conduct Authority published final guidance on Wednesday setting out which crypto activities will need its authorization, ahead of the Sept. 30 opening of applications and a day after HM Treasury published draft changes that carve exemptions out of the same rules.

Activities in scope range from issuing qualifying stablecoins and operating trading platforms to dealing, arranging deals, safeguarding crypto and arranging staking. The regime takes effect Oct. 25, 2027. The application window runs from Sept. 30 until Feb. 28, 2027, for firms that want to use the transitional arrangements, and the regulator said existing registrations and permissions will not convert automatically.

“Getting ready for regulation starts with understanding how the regime applies to your business,” David Geale, who oversees consumers, payments and competition at the FCA, said in the regulator’s release.

Treasury’s draft amendments, laid before Parliament for approval, would remove transfers and exchanges of UK-issued qualifying stablecoins from the dealing and arranging activities, taking payments in those stablecoins outside the crypto licensing requirements for those activities. According to Treasury’s explanatory memorandum, lending and borrowing those stablecoins would stay regulated, as would exchanging them for cryptoassets other than UK-issued stablecoins.

The draft also excludes certain proprietary trading and market making from dealing as principal. It removes from the arranging activity firms that are neither FCA-authorized nor payment service providers and merely provide a technical interface to authorized services or decentralized protocols, as long as they exercise no discretion over, and are not substantively involved in, the transactions. Treasury said in the memorandum that the changes are meant to “remove unnecessary regulatory barriers” while keeping standards for activities that pose material risks.

The FCA said most firms can use Wednesday’s guidance now to prepare, but it will consult on updates covering UK stablecoins, proprietary trading and market making, technology providers, decentralized protocols, central securities depositories and financial promotions. The press release puts that consultation in October; the policy statement says late 2026, with final guidance in early 2027.

The regulator received 78 responses when it consulted on the guidance in April. It finalized its core crypto rules in June, and the UK and US published a joint roadmap in July for aligning rules on tokenized assets and cross-border stablecoins.

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