The UK government and the Financial Conduct Authority (FCA) have continued to develop the regulatory landscape applying to cryptoassets. In October 2027, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (the Cryptoasset Regulations) will bring cryptoasset activities within the scope of regulation under the Financial Services and Markets Act 2000. Persons carrying on those activities by way of business in the UK will need FCA authorisation, unless exempt.
The FCA recently proposed changes to the Perimeter Guidance Manual within the FCA Handbook to improve understanding of the scope of the new regulated activities and when permissions will be required. The draft changes were published in the FCA’s consultation on its Cryptoasset Perimeter Guidance, which closed for comment on 3 June 2026. Final guidance is expected to follow in September 2026. Whilst the draft guidance set out in the consultation paper does not change the position as set out in the Cryptoasset Regulations, it does help clarify the scope of the forthcoming regulation of cryptoasset activities and when permission would be needed.
Overseas firms may wish to consider whether their activities would be deemed carried on “in the UK” — for example, where they are involved in sales or subscriptions of qualifying cryptoassets to or by UK consumers without an authorised principal dealer or UK qualifying cryptoasset trading platform interposed — because FCA authorisation may be required.
Carrying on a regulated activity without authorisation or exemption is a criminal offence.
Whilst this GT Alert focuses particularly on the territorial scope of the Cryptoasset Regulations and the implications for overseas firms, assessment of necessary permissions and readiness for the coming into force of the new regulatory regime is something that all crypto firms may wish to give due thought to.
Context on the UK Cryptoasset Regulatory Landscape
The FCA’s consultation follows a period of increased regulatory scrutiny of the crypto sector globally, including in the aftermath of the collapse of several major crypto platforms, which heightened concerns around the controls (or lack thereof) in this market. The current trend is towards a more interventionist approach to crypto supervision and enforcement in the UK.
The UK government and FCA continue to pursue a phased approach to crypto regulation. Existing anti-money laundering registration requirements and the financial promotions regime have already brought certain crypto-related activities within scope of UK regulation. On 25 October 2027, the Cryptoasset Regulations will bring specified cryptoasset activities into the FCA’s perimeter.
Through the Perimeter Guidance, the FCA intends to advance its objectives of consumer protection, market integrity, and international competitiveness.
Key Takeaways for Overseas Firms
The regime under the Cryptoasset Regulations hinges on whether activities are regarded as carried on “in the UK.” Notably, and unlike the FCA’s approach to firms offering more mainstream investments and the “characteristic performance” test, which treats the location of different regulated activities in different ways, this test does not turn on the entity providing the services having a presence in the UK from which it offers the relevant services. Instead, it will, in certain circumstances, apply where firms with no UK footprint provide services to consumers in the UK. Importantly, at present, there is no planned exemption for “reverse solicitation,” whereby overseas firms could avoid the UK perimeter if they are subject to an approach by a UK person or entity that is either unsolicited or solicited in a manner compliant with UK law (for example following a lawful financial promotion).
This wider approach taken in the Cryptoasset Regulations is intended to combat firms operating offshore to avoid regulatory oversight whilst continuing to service UK consumers. The chosen approach reflects the FCA’s consumer protection objectives and works to avoid creating an uneven playing field for UK-based firms.
Over the coming months, overseas firms may wish to consider taking the following actions to help prepare for the new regulatory requirements:
- Assess whether any activities with a UK nexus fall within the scope of being carried on “in the UK.”
- Consider the scope of each of their activities against the regulatory framework, including whether exclusions or exemptions apply. It is the substance of the activity that matters, not the name that may have been ascribed to it.
- Give due consideration to the operating structure, including the use of intermediaries. Alternatively, consider the use of geo-blocking or equivalents if there is no desire to fall within the UK perimeter.
- Determine whether a UK entity needs to be set up. The FCA has reiterated in the Consultation Paper that, whilst not a blanket requirement, its baseline expectation is for firms requiring FCA authorisation to carry out regulated cryptoasset activities from a UK legal entity. This enables more effective regulatory supervision by the FCA. Restructuring may ultimately be required, including the setting up of a UK subsidiary.
- Give careful consideration to any services which include automated, block-chain based or decentralised features, and properly assess whether there is an identifiable person carrying out relevant activity in the UK such that permissions are required. The FCA has said that the involvement of smart contracts, public blockchains, or elements of decentralisation does not mean the activity is outside the scope of regulation. Points to consider include who operates or maintains the service or receives fees or other commercial benefit.
- If necessary, make an application for authorisations or variation of permission once the application window opens (which the FCA has stated will be between 30 September 2026 and 28 February 2027).
- Closely monitor for further consultations and guidance.