Crypto Rulebook, the UK Way

Over the past few years, the UK’s approach to crypto regulation has often felt fragmented. Firms registered for AML purposes, financial promotions were tightened, enforcement actions made headlines, but there was never a single, coherent framework that treated crypto as part of the mainstream financial system.

That is now changing decisively.

In December, HM Treasury confirmed its intention to bring a broad range of cryptoasset activities fully within the UK regulatory perimeter. Shortly after, the Financial Conduct Authority published three detailed consultation papers setting out how this new regime would actually work in practice.

In summary, the UK is creating a formal, clearly defined pathway for entry into its market. The price of admission is higher, but so is the legitimacy that comes with it.

From AML registration to full authorisation

Until now, most crypto firms operating in the UK have sat under a relatively narrow framework, focused largely on anti-money laundering registration and financial promotions. That model is being retired.

Under the proposed changes, cryptoasset activities will be regulated under a FSMA-style regime, aligning them far more closely with traditional financial services. This means that firms wishing to operate in the UK will need to be fully authorised, and subject to comprehensive conduct, prudential, governance, and market-abuse requirements.

A wide perimeter, drawn deliberately

What stands out in the FCA’s proposals is just how broad the regulatory scope will be.

The consultations cover:

• cryptoasset trading platforms and intermediaries,

• custody and staking services,

• conduct obligations across the value chain,

• a dedicated crypto market-abuse regime,

• and a new prudential framework to ensure firms can withstand stress.

It is a comprehensive attempt to regulate crypto as finance, rather than as a special category requiring bespoke exemptions.

One notable example: the FCA does not propose banning platforms from listing their own tokens outright, but it does expect conflicts to be identified, managed, and disclosed to a standard consistent with mature financial markets. That philosophy runs throughout the proposals.

Market integrity takes centre stage

Another clear signal from the UK regime is the emphasis on market integrity.

The proposed crypto market-abuse framework includes expectations around:

• insider lists,

• surveillance,

• information sharing,

• and controls to detect and disrupt abusive behaviour.

This goes well beyond what many crypto firms have historically implemented, particularly those that grew up in jurisdictions where market-abuse concepts were less developed.

The UK is effectively saying: if you want access to a major global market, the standards will look familiar to anyone who has operated in regulated securities markets before.

Why the UK is doing this now?

Timing matters.

The UK’s proposals are explicitly framed not just as a domestic risk-management exercise, but as a competitive positioning strategy. By providing clarity, predictability, and a single authorisation framework, London is making a play for international capital, global firms, and institutional confidence.

There is also a geopolitical dimension. Coordination with the US, and engagement at international standard-setting bodies, suggests an ambition to shape global norms, not merely follow them.

For firms weighing where to invest, hire, and build long-term infrastructure, this kind of regulatory certainty can be as important as tax or market size.

The compliance reality for firms

Of course, clarity cuts both ways.

The UK regime will come with:

• higher compliance costs,

• deeper governance expectations,

• senior management accountability,

• and far less tolerance for ambiguity.

For some firms, particularly those accustomed to lighter-touch environments, this will be a shock. For others, specially those already operating under mature regulatory frameworks, it may feel like a natural extension.

Either way, the direction of travel is clear: operating in the UK crypto market will increasingly resemble operating in regulated financial services.

And how this compares to Hong Kong

It’s impossible not to compare the UK’s approach with what we’ve seen recently in Hong Kong.

Hong Kong has been expanding its virtual-asset framework incrementally: trading platforms first, then dealers and custodians, and now advisory and asset management services. It’s a classic “crossing the river by touching the stones” approach: modular, activity-specific, and risk-calibrated.

The UK is doing the opposite.

Rather than building regime by regime, it is opting for a single, comprehensive overhaul, pulling cryptoasset activities into the heart of its financial regulatory system in one decisive move. Different styles, same destination.

Both jurisdictions are sending the same core message:
crypto is no longer exceptional, it is being normalised.

What this means in practice

For global firms, this divergence creates strategic choices.

Hong Kong offers a carefully sequenced framework embedded in an APAC financial hub, with strong emphasis on asset safety and licensing clarity by activity.
The UK offers a fully integrated regime within a G7 market, with higher upfront compliance demands but unmatched global signalling value.

The question firms now face is not where regulation is lighter, but where their governance, controls, and risk culture are genuinely ready to operate.

A closing thought

If the last few years were about whether crypto would be regulated, the next few will be about how firms adapt to being regulated like everyone else.

The UK’s proposals make one thing clear: regulatory optionality is disappearing. The choice is no longer regulation or innovation.

Going forward, It is either credible participation or strategic retreat.

As always, if you’re thinking through how the UK’s direction compares with Hong Kong, or what this means for your own roadmap, I’m very happy to compare notes.

Sources:

FCA Feedback / Announcement / C25.40 / C25.41 / C25.42

Thanks for reading,
Alexey