The exhaustive wait for a regulatory regime for crypto assets in the United Kingdom will soon be over, with the country’s financial watchdog having recently set a date for the introduction of its framework, October 2027. However, a new study suggests that while there is broad market enthusiasm for the incoming regime, a substantial portion of U.K. crypto firms are not ready for it to take effect.
Whilst the European Union got busy making and implementing its landmark Markets in Crypto-Assets (MiCA) regulation, the U.K. watched on and consulted. As the United States struggled through partisan politics and successive government shutdowns, which brought the already snail-paced legislative process to a complete standstill, it still eventually managed to pass substantive stablecoin legislation in the form of the GENIUS Act, while the U.K. dilly-dallied with further consultations.
Despite government after government—both Tory and Labour—committing to supporting innovation and making the U.K. a digital asset hub, to this day, the only notable pieces of regulation governing the space are the country’s anti-money laundering (AML) rules and the financial promotion regime—the latter of which has received harsh criticism from some in the digital asset industry for its implementation.
However, the top U.K. finance regulator, the Financial Conduct Authority (FCA), the body responsible for setting and overseeing the U.K.’s crypto rules, has now concluded what was beginning to look like a never-ending consultation process, finalized rules, and set a date for their implementation.
According to the FCA, firms can apply for authorization between September 30, 2026, and February 28, 2027, so they are ready to start or continue trading under the new regime, which will come into force on October 25, 2027.
As any parent who has lived through the crying baby, the manic tantrum toddler, and the resentful rebellious teenager phases of parenthood will tell you, over the course of 18 or more years you may frequently find yourself pining for that day when the kids are finally ready to leave the nest—in the most loving way possible—and yet, when it finally arrives, you’re still not ready for it.
This appears to be the fate for a majority of the U.K. digital asset market, based on the findings of new research from digital assets platform Zumo, which revealed a U.K. crypto market caught between ambition and execution as the new regulatory regime draws near.
According to early insights from Zumo’s ongoing survey of cryptoasset service providers serving U.K. clients, only 10% of providers consider themselves fully prepared for the new rules, with 70% identifying losing the ability to serve their U.K. customers as a main risk of not being ready for the new regime, while 50% having concerns about financial penalties or regulatory sanctions and the subsequent loss of revenue or market share.
“With the U.K.’s regulatory regime now set in stone, authorization will become a game changer,” said Nick Jones, Founder and Chief Executive of Zumo, in a press release shared with CoinGeek. “The early findings from our survey indicate a market caught between ambition and execution; firms have decided the U.K. is worth the effort, but must overcome a number of obstacles to be ready in time to realize the opportunity.”
Yet, despite this worrying lack of preparedness, Jones added that “it’s encouraging that firms are treating readiness seriously and reaching for the expertise they need – the cost of getting it wrong is cutting off access to one of the world’s most compelling markets.”
Ambition ahead of execution
Following the publication last month of the FCA’s final rules and guidance, the regulator is now preparing to open its application gateway for firm authorizations on September 30, 2026, ahead of the implementation of the regime in October 2027.
According to Zumo’s survey, 9 in 10 firms intend to apply for authorization during this application window. There’s also a notable level of optimism amongst these firms that the incoming regime will prove beneficial, with 60% expect it to expand their U.K. business, and the same figure saying the incoming regime will boost interest among their customer base in crypto as an asset class.
However, when it comes to preparedness, the outlook is less positive. While Zumo’s survey revealed that awareness of the regime was universal among respondents, it also found that execution is at a very early stage.
Half of the respondent firms were still in the planning phase of regulatory readiness initiatives; just 10% of providers considered themselves fully prepared for the new rules; and six in ten were still assessing how to adapt their U.K. operating model to meet the new requirements.
On top of this, a worryingly high proportion, eight in ten, perceived their risk of not being ready in time as moderate to high, and 60% believed their current operating model would be exposed to regulatory enforcement.
When it comes to why so many remain unprepared and pessimistic about getting so in time, 3 in 10 said their organization’s single biggest challenge was determining which rules apply to them and what permissions are needed. On top of this, some also cited the cost and internal resource demands of getting ready.
FCA offers a helping hand
The authorization gateway for firms will open on September 30 of this year, giving firms a year to get their registrations in line before the new regime comes into force in October 2027.
To assess how easy, or not, it would be for firms to get themselves in line with the new rules during this period, Zumo asked firms to rate how “fair” the FCA guidance to date was. While 80% of respondents rated it ‘fair,’ with none rating it ‘poor,’ the research uncovered a consistent set of asks: clearer guidance on regulatory scope and applicability, more time and transitional arrangements, and better signposting of U.K.-compliant infrastructure and technology solutions.
Fortunately, despite its long gestation period, the FCA predicted some level of unpreparedness for the regulation, which is why it is offering a pre-application support service (PASS). This aims to give firms support to prepare an application to the FCA and offers pre-application meetings with the regulator to those considering applying for registration or authorization.
“The FCA’s Pre-Application Support Service (PASS) meetings for cryptoasset firms are now officially underway, which provide an opportunity to connect some of the dots,” Zumo said. “These meetings give firms an opportunity to ask questions and discuss their business plans ahead of the application window.”
The FCA has also encouraged firms to make use of the PASS service, rather than find themselves scrambling to get compliant before next year’s deadline. Based on the Zumo survey, which is still open until September 30 for those who want to give their two-cents, it can only be hoped that more firms will take the regulator up on its offer of help.
Soon-to-be UK framework
On June 30, the FCA released the final package of policy statements, completing its Crypto Roadmap following numerous consultations over the past few years.
Principally, the U.K.’s new cryptoasset regime brings most crypto activities within the Financial Services and Markets Act (FSMA) for the first time, under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, made by Parliament on February 4, 2026.
Firms conducting activities such as cryptoasset trading, custody, dealing, arranging, staking, and qualifying stablecoin issuance must obtain FCA authorization, replacing the current reliance on AML registration under the MLRs, and existing registrations don’t convert automatically.
Amongst the key incoming mandates, the framework applies prudential, governance, operational resilience, and Consumer Duty standards similar to those for traditional financial (TradFi) services. It also introduces rules on market integrity, cryptoasset admissions and disclosures, a dedicated market abuse regime—adapted for crypto-specific features such as assets with no traditional issuer—safeguarding of client assets, and redemption rights for stablecoins, including a requirement that systemic stablecoin holders be redeemed at par within 24 hours, with no suspension right.
Meanwhile, the Bank of England (BoE) will oversee these so-called “systemic stablecoins,” those recognized by HM Treasury as posing potential financial stability risks because of their size. The FCA will supervise conduct, issuance, and consumer protection for systemic issuers, with the two regulators jointly overseeing firms once they’re recognized as systemic, while the BoE will focus on financial stability, resilience, and payment-system risks.
For systemic stablecoins, the Bank requires high-quality backing assets, robust governance, effective redemption at par, operational resilience, and risk management. Following its recent June 22 policy statement, the baseline backing-asset split will be 70% short-term U.K. government debt securities and 30% unremunerated deposits at the BoE.
In addition, issuers recognized as “systemic at launch” will get a temporary step-up allowance to hold up to 95% of backing assets in gilts, with the remaining 5% in Bank deposits, stepping down to the 70/30 baseline as they scale.
The approach of the FCA and BoE has been generally well received by the market, with industry advocacy group Crypto UK describing it as “a regime that protects consumers and markets while enabling responsible innovation.”
This is perhaps no surprise, since the FCA and BoE both consulted long and hard on their approaches, allowing numerous market participants and advocacy groups to have their say and help shape the regulations.
While there is no indication from the FCA or BoE of plans to change the announced approaches, there has been some recent criticism of the undue influence certain shadowy crypto-lobbyists may have had on U.K. lawmakers, and thus, pressure from above that those making the rules may have felt.
Crypto lobby at work
Earlier in July, it was revealed that the leader of the Reform UK party, Nigel Farage, had been reported to the U.K.’s National Crime Agency over a £5 million ($6.75 million) gift from Thai-based cryptocurrency billionaire Christopher Harborne, which he received in 2024 before announcing his decision to stand in the general election.
Last August, Harborne, a significant shareholder in Tether, the world’s largest stablecoin issuer, also gave £9 million ($12.16 million) in cash to Farage’s Reform party, a further £3 million ($ 4.05 million) to the party in October, and another £3 million ($ 4.05 million) in January.
All of these donations were declared; however, the £5 million ($6.75 million) “personal gift” directly to Farage was not disclosed. Thus, when it was revealed, it became the subject of parliamentary investigations, leading to Farage resigning as an MP on July 7—only to immediately announce he was running again in the ensuing by-election for his vacated seat.
Farage has insisted that the undisclosed money was an “unconditional gift,” that he did not need to declare it to parliamentary authorities, and that he could do whatever he wanted with it—even telling a LBC Radio interview that “I can spend it on Ferraris if I want.”
Nevertheless, the scandal exists because people want to know who is influencing their political parties. This is the reason why political donations must be declared and why the integrity of the democratic system demands transparency.
Despite the furor, as things stand, Farage is the leader of a fringe party with only eight MPs in the 650-member House of Commons. For context, the ruling Labour party has 403 MPs and the principal opposition, the Conservative (Tory) party, has 117.
Recent polling has suggested a general election would see Reform gain significantly more seats, potentially even the largest vote share, which is why there is increased focus on who may be pulling the strings of Farage and Reform—even though such polling has proved to be very unreliable when it comes to the actual voting.
In addition, despite having very little real power—currently—to influence decision-makers at the highest levels of government and regulation, Farage has actively lobbied for the crypto space for a long time, and even at the highest levels.
In June, The Guardian newspaper revealed that Farage used a private meeting at the BoE to urge its governor, Andrew Bailey, to drop plans for a central bank digital currency (CBDC)—something that would prove competition to stablecoins such as Harborne’s Tether.
In a recent letter, Bailey confirmed the meeting, saying Farage made his views “very clear,” but that the “intervention” did not change the Bank’s policy, and that he could spot “lobbying” and knew how to discount it.
Despite the BoE governor’s assurances, such controversial lobbying of regulators from prominent political figures, backed by Tether shareholders, is exactly the kind of thing that may cause concern to other industry advocates, such as Crypto UK, who are generally happy with the state of the incoming regulation and don’t want to see a knee-jerk reaction against crypto from those in government with real influence over lawmaking.
Fortunately, Bailey’s dismissal of Farage likely goes some way to calming these fears. After such a long road to finalizing the rule, it also seems unlikely the FCA or BoE would have a change of heart to appease the demands of a recently shamed and resigned MP, whose finances are still under investigation.
In other words, U.K. crypto firms should focus on upping their preparations for the impending rules and ignore the outside noise for now.
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