UK Treasury Plans Full Crypto Regulation by 2027 with FCA Oversight to Strengthen Consumer Protections
- UK Treasury plans to regulate crypto like other financial products under FCA oversight by 2027.
- New rules will require crypto firms to meet the same conduct transparency and AML standards as finance firms.
- Rising crypto use and scam losses pushed regulators to bring digital assets fully into financial law.
The UK Treasury is developing regulations to oversee crypto assets in a similar way to how traditional financial products are overseen by the Financial Conduct Authority by 2027. The proposal would put the digital asset firms squarely within the UK financial regulatory perimeter.
Exchanges, wallet providers and issuers would be subject to the same expectations as regular financial institutions. Authorities are trying to enhance consumer protection and boost market integrity.
The planned framework represents a structural change in crypto oversight. Digital assets would no longer operate under lighter supervision. Instead, they would follow established financial services law. The Treasury views this shift as necessary due to rising consumer exposure and market risks.
Treasury legislation brings crypto into financial regulation
The Treasury plans to extend existing financial services legislation to crypto activities. Trading, custody, issuance, and payments would fall within scope. The companies providing crypto services in the UK would require FCA licensing. They would also adhere to conduct and transparency standards.
This approach avoids building a standalone crypto regime. Instead, it aligns digital assets with familiar regulatory principles. Officials believe this reduces uncertainty for firms. It also limits regulatory gaps that have allowed misconduct.
The proposed bill will be presented in Parliament in the next few months. Legislators will evaluate the ways in which the existing financial regulations are applicable to the crypto markets. Regulators would subsequently introduce requirements. It is to be fully enforced in October 2027.
FCA oversight and regulatory rollout timeline
The new framework will place crypto firms under the oversight of the Financial Conduct Authority. Businesses are required to comply with anti-money laundering requirements. They also need to abide by market behavior and consumer disclosure rules. Registration alone will no longer be sufficient.
The FCA is formulating regulations on market abuse and trading standards. Asset protection and operational resilience will be covered by the custody requirements. Crypto asset issuers will have more apparent disclosure requirements. These are in a bid to enhance accountability in the sector.
The Bank of England is also preparing stablecoin regulation. Its suggestions center on the financial stability and payment systems. Both regulators are set to complete their rule books by the year 2026. This timeline supports coordinated implementation. Last month, The Bank of England launched consultation on regulations for systemic sterling-backed stablecoins, aiming to modernize payment systems.
Consumer risks accelerate regulatory action
The ownership of crypto in the UK has been increasing over the past years. According to the data provided by the financial regulator, approximately 12% of adults are digital asset holders. Increased participation has brought higher consumer losses. Investment scams linked to crypto have surged.
Banking industry figures show scam losses rose 55% year on year. Many cases involved fake tokens and misleading platforms. Regulators see these trends as a key driver for reform. Stronger oversight is expected to reduce consumer harm.
Treating crypto like other financial products may improve safeguards. Firms would provide clearer risk information. Regulators would gain stronger enforcement powers. Consumers would benefit from consistent standards.
Legal clarity and broader policy direction
The UK has already recognized crypto assets as legal property. Digital assets can be owned, inherited, and recovered. This recognition supports enforcement and civil claims. It also complements the planned regulatory framework.
The Treasury’s approach reflects wider international developments. The European Union implemented its MiCA framework last year. The United States is advancing its own crypto rules. Britain aims to remain aligned while protecting its financial system.
Ministers are also considering restrictions on crypto political donations. Concerns focus on tracing sources and ownership. These discussions sit alongside market regulation efforts as the UK prepares for comprehensive crypto oversight.
