Crypto firms should strengthen compliance controls ahead of FCA authorisation regime

Cryptoasset businesses looking to operate under the Financial Conduct Authority’s (FCA) new regulatory regime will need to ensure they have robust controls in place, particularly in areas such as anti-money laundering (AML) and customer due diligence, an expert has said.

The FCA has opened applications for firms seeking authorisation under the UK’s new cryptoasset regime, which will bring crypto businesses into full FCA regulation for the first time. Firms intending to continue operating in the UK should apply by 28 February 2027, ahead of the new framework coming into force on 25 October 2027.

According to new figures obtained by Pinsent Masons, the proportion of cryptoasset firms securing FCA registration has increased significantly over the past year, suggesting a growing willingness on the part of regulators to engage with the sector as it moves towards full regulation.

The data shows that 13 of the 22 cryptoasset registration applications determined in the year to 30 June were approved, compared to seven approvals from 32 applications in the preceding year.

Anthony Harrison, financial regulatory expert at Pinsent Masons, said: “The FCA is preparing to oversee the industry on a much broader scale from next year. The new regime will require a real step change from businesses operating in the sector because they will come under scrutiny on a much wider range of issues.”

The FCA said the new framework will introduce requirements relating to consumer protection, safeguarding of customer assets, market integrity and financial resilience. It has also made clear that authorisation will not be automatic, with firms required to demonstrate that they meet the regulator’s standards before they can undertake regulated cryptoasset activities in the UK.

While crypto firms are currently primarily subject to AML registration requirements, the forthcoming regime will align regulatory expectations much more closely with those applicable to mainstream financial services firms.

Harrison said: “Firms should begin preparing now by reviewing governance arrangements, compliance frameworks, systems and controls, and the capabilities of key personnel. This is particularly important in areas such as anti-money laundering and customer due diligence. These have historically been areas of significant regulatory focus, with substantial enforcement penalties in the UK and internationally arising from failures in financial crime systems and controls.”

“The FCA has always offered a certain level of cooperation with crypto firms, such as advising companies when to withdraw applications that are unlikely to be approved, but that collaboration is now much greater. It does seem like crypto firms are seeing a greater willingness from the FCA to engage with the sector.”

Businesses should also expect increased scrutiny of their customer-facing activities once the new regime takes effect.

“Firms will need to ensure their financial promotions are compliant, that risk warnings are appropriate, and that they have qualified staff and robust systems and controls in place,” Harrison said.