In recent years, cryptoassets have evolved from niche financial instruments to mainstream digital assets. As interest from investors, innovators and regulators intensifies, the UK has taken significant strides to clarify and develop its regulatory framework for these assets.
This blog offers an up-to-date, comprehensive view of the UK’s regulatory approach to cryptoassets, what makes it distinctive internationally, and what individuals and firms should consider in terms of compliance.
What are cryptoassets?
Cryptoassets, also referred to as digital assets or cryptocurrencies, are cryptographically secured digital representations of value or contractual rights. They are typically decentralised, operate on blockchain technology and can be used for a wide range of purposes, such as trading, investment, fundraising or as units of exchange.
Although Bitcoin and Ethereum remain the most recognisable examples, the crypto landscape now includes stablecoins, utility tokens, non-fungible tokens (NFTs) and more complex instruments such as tokenised securities and staking mechanisms.
Are cryptoassets legally recognised?
The UK has historically taken a principle-based, tech-neutral approach to financial regulation. Although there is no standalone statutory regime solely for cryptoassets, the judiciary and regulators have signaled increasing willingness to treat these assets as legally significant.
The Property (Digital Assets) Bill, introduced in 2024, marks a pivotal moment in the UK’s legal treatment of crypto. The bill proposes to classify certain digital assets, including cryptocurrencies and NFTs, as a new category of personal property. This initiative follows the Law Commission’s 2023 recommendations and would grant crypto holders stronger legal rights – enabling, for instance, more robust remedies in cases of fraud or theft.
Regulatory considerations: HM Treasury’s broadened approach
The UK’s regulatory stance has notably expanded since HM Treasury’s landmark consultation in 2023. This initiative set the foundation for a phased regulatory approach aimed at establishing a comprehensive crypto asset framework by 2026.
Key areas under consideration include:
- Public offerings and trading venues: entities offering cryptoassets to the public or facilitating secondary trading (e.g. exchanges) are likely to face obligations akin to traditional securities offerings, including robust disclosure rules and registration requirements.
- Intermediation and custodial services: wallet providers and custodians will be required to adhere to governance, operational resilience and safekeeping standards to protect client assets.
- Lending and staking services: the government has indicated a desire to bring cryptoasset lending and staking activities into regulatory scope, subjecting them to prudential requirements and consumer protection rules.
- Disclosure and market abuse regimes: a new regime is in development to mirror traditional financial market standards, covering insider trading, misleading statements and manipulation in crypto markets.
- Financial crime: crypto’s potential for facilitating illicit finance remains a top concern. AML compliance, know-your-customer (KYC) protocols and suspicious activity reporting obligations are central to the government’s strategy.
These considerations are part of a shift toward aligning crypto regulation with broader financial sector norms, while accounting for the unique characteristics of blockchain-based technology.
We have recently written an article titled UK crypto regulation – a much-needed update on the current state of UK crypto regulation, which charters the developments and current proposals.
Core principles: AML, consumer protection and beyond
Two guiding principles underpin the UK’s regulatory approach: preventing financial crime and protecting consumers.
- Anti-money laundering (AML): crypto asset firms providing cryptoasset services that come within the scope of the money laundering regulations must register with the Financial Conduct Authority (FCA). The FCA’s approach has been stringent, with many firms failing to secure registration due to weaknesses in AML frameworks.
- Consumer protection: the government is actively working on a framework to ensure crypto asset promotions are clear, fair and not misleading. This extends to advertising rules and fair presentation of risk, especially for high-volatility or speculative products.
Additional concerns include: - Data protection: firms must comply with UK GDPR obligations, especially when processing sensitive transaction and identity data.
- Intellectual property: with NFTs and tokenised content, IP rights become a pertinent legal issue.
- Advertising standards: the Advertising Standards Authority (ASA) has taken action against misleading crypto promotions, and future rules will likely be stricter.
Who are the regulatory and other authorities?
Financial Conduct Authority
The Financial Conduct Authority (FCA) is the primary regulatory body for cryptoassets, especially under the AML regime. However, broader supervision is shared with HM Treasury and, for taxation matters, HM Revenue & Customs (HMRC).
The FCA is implementing a phased approach to crypto regulation. In December 2024, it released a significant discussion paper outlining proposed rules on disclosure obligations and market integrity. This forms part of its roadmap to a comprehensive framework by 2026. Stakeholder feedback is actively shaping these developments.
Bank of England
The Bank of England also plays a role, especially regarding systemic risk and future developments around central bank digital currencies (CBDCs), such as the proposed ‘digital pound.’
Relevant legislative and regulatory instruments
Crypto regulation intersects with several key legislative instruments:
- Financial Services and Markets Act 2000 (FSMA): core regulatory framework for UK financial services. Many crypto asset activities are expected to fall under its scope in the near future.
- FSMA 2023 Amendment: grants HM Treasury authority to regulate cryptoassets, marking a significant policy shift.
- CIS Amendment Order 2025/17: clarifies the regulatory perimeter regarding staking arrangements and collective investment schemes. The Amendment removes “qualifying cryptoasset staking” from the scope of the CIS Order, and it came into force on 31 January 2025.
- Financial Promotion Order 2005 (FPO): firms engaging in cryptoasset promotions must comply with updated FPO rules or seek exemptions.
How does the UK compare, globally?
Internationally, the UK is positioning itself as a pragmatic, innovation-friendly jurisdiction – somewhere between the United States’ enforcement-first model and the European Union’s prescriptive regulatory frameworks.
While the EU’s Markets in Crypto-Assets (MiCA) regulation introduces a pan-European licensing regime, the UK prefers a more iterative approach, tailoring rules gradually through consultations and phased implementation.
This has made the UK attractive for firms seeking regulatory clarity without the rigidity of one-size-fits-all frameworks. However, this also means firms must stay attuned to evolving guidance and prepare for a more comprehensive licensing system by 2026.
Current risks and emerging trends
The dynamic nature of crypto markets introduces ongoing legal and regulatory challenges. One notable concern is the emergence of unregistered platforms that blur the lines between social media, gaming and financial services.
For instance, recent scrutiny has been placed on platforms like TikTok, where virtual tokens with cash-convertibility could inadvertently fall within the scope of regulated crypto exchanges.
Similarly, crypto casinos – gambling platforms using cryptocurrencies to circumvent restrictions – are growing in popularity. Many operate in legal grey areas or in direct contravention of UK laws. Regulators have issued cease-and-desist notices and are actively monitoring these developments.
Looking ahead: what to expect
The UK’s regulatory landscape for cryptoassets is maturing quickly. Firms and individuals involved in the crypto space should prepare for:
- Stricter AML and financial crime requirements.
- Mandatory FCA registration for a wider array of activities.
- Robust consumer disclosure and advertising controls.
- Legal recognition of cryptoassets as personal property.
- Further alignment with global standards and cross-border regimes.
Stakeholders should monitor developments closely and seek legal guidance when engaging in crypto-related activities, especially as we approach the UK’s target for a complete regulatory framework by 2026.
Conclusion
The UK is not merely reacting to the challenges of cryptoassets—it is building a long-term, adaptable framework. This evolving environment offers exciting opportunities for responsible innovation but also raises the bar for legal compliance. Whether you are a retail investor, a startup founder or an established financial institution, understanding the trajectory of UK crypto regulation is essential.
At Gherson, our specialist regulatory and white-collar crime teams are well-placed to advise clients navigating the complexities of this space. From FCA mandates to compliance with AML laws, we offer comprehensive support in this fast-changing landscape.
For tailored advice on crypto regulation in the UK, contact our team today.
How Gherson can assist
Gherson’s white-collar crime and regulatory team are able to provide advice and assistance with AML, regulatory and sanctions compliance, including in situations involving cryptoassets.
In addition, the team has published a series of articles on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. If you are seeking advice on relevant matters, including issues with the FCA registration process, please contact our specialist regulatory and compliance team, and they will be happy to offer assistance to both individuals and companies with navigating through the process.
Please do not hesitate to contact us for further advice, send us an e-mail, or, alternatively, follow us on X, Facebook or LinkedIn to stay up-to-date.The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
©Gherson 2025