On 29 April 2025, HM Treasury (HMT) published draft legislation, the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 (Order), accompanied by a policy note.

The Order establishes the framework for the UK's new cryptoassets regulatory regime, which will bring crypto exchanges, dealers and agents within the regulatory perimeter. Subject to parliamentary approval and parliamentary time, HMT intends to legislate for the new regime by the end of the year.

Background

In November 2024, Tulip Siddiq, then Economic Secretary to the Treasury, confirmed that the government would implement most of the proposals published in October 2023 during the Sunak administration. However, it has decided for now to not proceed with bringing stablecoins into UK payments regulation.

Key points to note

• The Order is in near-final form. HMT will consider technical comments on the Order. Comments should be sent by 23 May 2025.

• There are two commencement dates. On the initial commencement date, the FCA and PRA will be given the power to issue directions, guidance and rules so that they can operationalise the new regime. Full commencement will take place on a later date, which will be set out in the final Order.

• The Order creates new categories of specified investments (qualifying cryptoasset, qualifying stablecoin and specified investment cryptoasset) and specified activities for cryptoassets (stablecoin issuance, safeguarding, operating a qualifying cryptoasset trading platform, dealing in qualifying cryptoassets as principal and agent, arranging deals in qualifying cryptoassets, and qualifying cryptoassets staking).

• The territorial application of the Financial Services and Markets Act 2000 (FSMA) will be amended to make sure that cryptoassets firms that service UK retail customers are required to be authorised in the UK, wherever they are located.

• There are no provisions in the Order for decentralised finance. Where specified activities are being carried out on a truly decentralised basis, ie where there is no person that could be seen to be undertaking the activity by way of business, then the requirement to be authorised will not be applicable. The FCA will determine in any given case whether there is a sufficiently controlling party or parties that ought to be subject to the requirement to be authorised in accordance with section 19 of FSMA.

• The Order makes a number of consequential amendments to other secondary legislation, including existing financial promotion and anti-money laundering requirements for cryptoasset firms.

• Market abuse and admissions and disclosures provisions will be published "in due course."

Help is at hand

If have any questions about the regulatory regime for cryptoassets, please let us know.