Can UK crypto firms continue operating while awaiting FCA authorization?

UK crypto firms have gained access to the Financial Conduct Authority’s new authorization process as the country begins moving digital asset businesses toward full financial services regulation.

The Financial Conduct Authority said on Sept. 30 that firms can now submit applications under the incoming cryptoasset regime, with businesses planning to continue regulated activities in the UK expected to apply by Feb. 28, 2027. The rules will take effect on Oct. 25, 2027.

Authorization will bring crypto businesses under standards covering consumer protection, safeguarding customer assets, market integrity and financial resilience. Firms that fail to demonstrate that they can meet the requirements will not receive permission to provide regulated cryptoasset services in the country.

“The UK’s new crypto regime will give consumers greater protections and firms a clear framework to operate in,” Dominic Cashman, director of authorization at the FCA, said. “Firms can now apply for authorisation and start preparing for regulation.”

FCA authorization applications are now open

Applications opened at 7 a.m. UK time on Sept. 30, starting a five month period for existing businesses seeking to secure their position before the new rules become mandatory.

As crypto.news previously reported, the main application period runs through Feb. 28, 2027. Firms that submit during the window may continue providing specified cryptoasset services while the FCA considers their applications if no decision has been reached when the regime starts.

The FCA expects to determine applications submitted during the window before Oct. 25, 2027, but filing does not amount to approval. Each applicant will still need to satisfy the regulator’s authorization standards.

Timing becomes particularly important for firms whose applications remain unresolved when the rules take effect. An eligible existing business that submits during the application period can continue serving customers, including taking on new business, while its application is assessed under the applicable saving provisions.

A business that waits until after Feb. 28 can still seek authorization, but it will not receive the same treatment if its application remains pending when the regime begins. FCA guidance provides a more limited transitional route for eligible firms in that position, generally allowing them to service contracts that existed before entering transition rather than continue taking on new UK business.

The distinction was examined in more detail ahead of the gateway opening, when the UK crypto licensing window was approaching. The FCA has made clear that an incomplete submission does not secure the same position as a valid application made during the designated period.

Existing crypto registrations will not carry over

Companies already registered with the FCA under the Money Laundering Regulations will have to go through the new authorization process.

Current MLR registration focuses on financial crime requirements and does not automatically become authorization under the Financial Services and Markets Act framework. Existing FSMA authorized companies may need to seek a variation of permission if they intend to provide crypto activities covered by the new rules.

The requirement was set out again in the FCA’s final perimeter guidance in September, which clarified how the new regime applies across different crypto business models. The fresh FCA authorization process covers activities including issuing qualifying stablecoins, operating cryptoasset trading platforms, dealing and arranging transactions, safeguarding cryptoassets and arranging cryptoasset staking.

Businesses will have to determine which regulated activities apply to the services they provide instead of relying on their existing regulatory status or a general description of themselves as a crypto company.

For example, a company operating a trading platform and holding customer assets may require permissions covering more than one regulated activity. Stablecoin issuers, custodians, intermediaries and staking businesses will similarly need to identify which parts of their operations fall within the FCA perimeter.

The FCA finalized its main crypto rules and guidance on June 30 after several rounds of consultations. The framework sets requirements across custody, capital, operational resilience, disclosures, market conduct and treatment of customers, while separate provisions apply depending on the services a company provides.

Firms face a full authorization assessment

Applicants will need to provide information beyond the controls required for the existing anti money laundering registration system.

The FCA’s application materials cover areas including business plans, controllers and close links, financial forecasts, governance, IT systems, financial crime controls, compliance monitoring and complaints procedures. Crypto specific questions depend on the activities and permissions sought by each applicant.

Customer asset protection will form part of that assessment for businesses providing custody services. The regulator will examine firms against standards covering safeguarding, financial resources and their ability to operate within the conduct requirements that apply to their business.

UK custody providers are already preparing for the regulatory change. CoinCorner, for example, recently introduced an insured Bitcoin custody service as the sector moves toward the 2027 framework. More than 50 companies were listed on the FCA cryptoasset register at the time, including Kraken, Ripple, BlackRock and BNY.

Registration on that list will not guarantee approval under the incoming system. The FCA said it will authorize firms only where they meet its minimum standards and the regulator believes they can continue meeting them after receiving permission.

FCA is offering support before firms apply

Companies that have not yet submitted applications can request meetings through the FCA’s Pre Application Support Service, which allows prospective applicants to discuss their business models and ask questions before filing.

The regulator began accepting requests for the service in May, with meetings starting in July. The sessions are free and are available to firms preparing applications for authorization or variations of their existing permissions.

Webinars covering the new rules and authorization requirements have been made available on demand, while the FCA has encouraged businesses to prepare complete applications instead of waiting until the end of the February window.

The regulator’s September perimeter guidance remains another part of that preparation process. It is intended to help firms determine whether their activities fall inside the new framework before they select the permissions required for their applications.

Some overseas businesses are preparing to seek entry under the framework as well. Binance reportedly plans an FCA license application as part of a potential return to the UK market, although an application itself would not guarantee authorization or permission to relaunch regulated services.

Until the new system takes effect, firms providing services covered by the existing Money Laundering Regulations must continue meeting current registration requirements. The FCA said companies seeking MLR registration after Sept. 30 should contact its pre application service to explain their plans, while applications under the MLR and FSMA frameworks remain separate processes.