UK’s New Crypto Rulebook Wins Praise, But Steep Hurdles Remain

The UK’s Financial Conduct Authority unveiled its long-awaited cryptocurrency regulatory framework this week, drawing early praise for its global approach even as industry figures warn that unresolved questions and a demanding authorization process could slow its impact.

A More Open Approach Than Europe

Unlike the EU’s MiCA rules, which industry participants say push firms toward ring-fenced European liquidity, the FCA’s framework preserves access to overseas trading venues and allows non UK stablecoins to circulate. Coinbase’s head of policy for Europe, Katie Harries, called the rules a major step forward for regulatory clarity and UK competitiveness. Under the new Qualifying Cryptoasset Trading Platform model, overseas exchanges could serve UK customers through locally authorized branches linked to global liquidity, rather than isolated domestic pools, according to Christopher Collins, a regulation partner at Katten Muchin Rosenman.

Key Questions Still Unanswered

Collins noted the FCA has yet to clarify which overseas jurisdictions meet its standard of “comparable” regulatory protection, a gap he said leaves firms without enough certainty to commit to UK operations. Harries also flagged decentralized finance as unresolved, warning that earlier proposals could block centralized platforms from offering DeFi access, potentially putting the UK behind jurisdictions like the US.

Authorization Process Seen As Tough

Thomas Cattee of Gherson Solicitors warned of a high risk of rejection under the new framework, noting the FCA already rejects or forces withdrawal of more than 85% of applications under its narrower existing anti-money laundering regime. The new rules add broader requirements around consumer protection, prudential standards and senior management accountability. Cattee urged firms not to delay applications, pointing to bottlenecks that left some companies unauthorized when MiCA deadlines arrived in Europe.

Institutional Investors See A Bigger Shift

Sandy Jones of Baillie Gifford said regulation alone doesn’t make crypto safer, but it provides the legal clarity and governance standards traditional financial institutions need before adopting blockchain infrastructure. She welcomed the FCA’s stablecoin refinements as a way to build solid settlement infrastructure without excessive friction.