• UK crypto firms must apply for FCA approval by September 2026 to operate under new rules.
• Firms missing the application window can serve current customers but cannot offer new services.
• Existing registrations under AML or payment rules will not automatically carry over to the new regime.

The United Kingdom is getting nearer to obtaining a formal regulatory framework of crypto assets. The Financial Conduct Authority (FCA) has given a definite period within which the firms can be authorized. Those firms that do not comply will be restricted in their operations.

✦ FCA announces September 2026 as the beginning for UK crypto licensing applications:

The Financial Conduct Authority (FCA) in the UK has outlined a schedule for a new crypto licensing framework, mandating that crypto businesses obtain FCA authorization before the system…

— ZoneCrypto (@_ZoneCrypto_) January 9, 2026

On Thursday, FCA declared that it will start a formal gateway through which crypto firms could apply to be licensed in September 2026. The new regulatory regime will be implemented in October 2027. Cryptocurrency firms in the UK or selling it should be registered under the Financial Services and Markets Act (FSMA).

Any current registrations through an anti-money laundering, payments, or e-money regime will not be automatic. The new regime requires that firms re-enter the permission to carry out regulated crypto activities before it starts. This will guarantee that every firm complies with the new standards of regulations.

Application Window and Transitional Provisions

Firms that apply during the September 2026 window but are still awaiting a decision when the rules take effect can continue operating temporarily. However, those that miss the application window or fail to secure approval will enter a transitional provision. This allows them to serve existing customers but prevents launching new regulated crypto offerings.

If authorization is ultimately refused, the affected firms must exit the UK market in an orderly manner. The FCA confirmed that third-party approvers will no longer be recognized. Transitional and saving provisions aim to prevent disruption in the crypto sector.

The application process is expected to be strictly monitored. The firms are expected to make applications at least 28 days prior to the commencement of the new regime. This guarantees that no submissions are done after the October 2027 regulations are in place.

Impact on Existing Crypto Firms

All UK crypto firms, including those already authorized for other financial services, must vary their existing permissions under the FSMA. The FCA emphasized that no firm can rely on prior registration to operate under the new regime. The UK FCA also opened consultations to set rules for crypto exchanges staking lending and DeFi activities.

Firms failing to meet the updated standards may continue only with current services. They cannot expand or introduce new crypto products. This approach aims to maintain market integrity and consumer protection as the sector transitions to formal regulation.

Government Oversight and Legislative Support

The UK Treasury has introduced a bill to align cryptocurrency operations with financial services regulations. The legislation should become effective at the same time as the new regime operated by FCA in October 2027. Regulators intend to concentrate on stablecoin payments, market integrity and consumer protection.

Although the framework is meant to offer clarity and legitimacy, critics caution that it would raise compliance costs. Increased prices would make the UK less favourable to certain crypto businesses. However, large exchanges have already started gearing up towards the new regulations, changing the standards of governance and operations.