HM Treasury laid the legislation for a full UK cryptoasset regulatory regime before Parliament on 15 December 2025, and the Financial Conduct Authority followed on 30 June 2026 with the detailed rulebook that sits underneath it. Most of it comes into force on 25 October 2027, at which point firms offering cryptoasset trading platforms or issuing stablecoins to UK customers will need full FCA authorisation for the first time – bringing crypto closer to how other financial products are already regulated.
Why regulation is arriving now
Ownership itself is actually falling: FCA research published in December 2025 found that 8% of UK adults held cryptoassets, down from 12% the year before. Among those who still hold crypto, though, the amounts involved have grown – average holdings rose year-on-year even as the number of holders fell, suggesting a smaller group of more committed, higher-value investors rather than the broad speculative interest seen a few years ago.
Meanwhile the cost of getting it wrong has risen sharply. UK Finance’s 2026 Annual Fraud Report put total UK investment scam losses at £221.5 million across 2025, a 40% increase on the year before, with crypto consistently among the assets fraudsters claim to be selling. An unregulated market with rising stakes and rising fraud is, in essence, exactly the gap this legislation is meant to close.
What the new regime actually requires
The legislation creates new regulated activities specifically for crypto: operating a cryptoasset trading platform and issuing stablecoins chief among them, alongside disclosure requirements when assets are admitted to a platform and a market abuse regime modelled on the one that already applies to shares and other securities. In practical terms, a firm carrying out these activities will need FCA authorisation to keep operating in the UK, and will be expected to meet the same kind of conduct, capital and governance standards as other regulated financial businesses.
Where FSCS protection will, and won’t, apply
This is worth being precise about, because it’s easy to overstate. The Financial Services Compensation Scheme’s deposit protection limit rose to £120,000 at the end of 2025 – but that higher figure applies to bank and building society deposits, not to investments. Investment protection under the FSCS remains at £85,000 per firm, per person. If cryptoassets are eventually brought within that investment category once the new regime is fully operational, any compensation would sit at that lower figure, and only in the event a firm fails or is at fault – the FSCS has never covered, and won’t cover, losses simply because the value of an investment falls.
What’s true today, before any of this takes effect
Until 25 October 2027, the picture is more limited than some of this legislation might suggest. Existing crypto firms currently only need to be registered with the FCA for anti-money-laundering purposes – a considerably lower bar than full authorisation, and one that carries none of the consumer protections that regulated status will eventually bring. Checking the FCA’s Financial Services Register remains a useful step before dealing with any firm, but it’s worth being clear-eyed that today’s registration isn’t the same thing as tomorrow’s authorisation, whatever a platform’s marketing might imply.
What this means if you hold, or are considering, crypto
Regulation arriving in 2027 will bring genuine improvements – clearer risk disclosure, a proper conduct framework, and eventually some route to compensation if an authorised firm fails through its own fault. It won’t, now or after 2027, make cryptoassets a low-risk investment. They remain highly volatile, and no amount of regulatory oversight changes that fundamental characteristic. If you’re weighing up whether crypto has a place in your wider financial plan, that’s a conversation worth having with an adviser who has no stake in the answer either way.
Talk to us before you commit
As financial planners based in Poole, we’re always happy to talk through where crypto might, or might not, fit into your financial plan – for clients across Bournemouth and the wider Dorset area. Get in touch if you’d like a second opinion before you commit to anything.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only. All information is correct at the time of writing (September 2026) and is subject to change in the future.
Cryptoassets are not currently regulated financial products, so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are not covered by existing consumer protection laws and are not suitable for the majority of investors.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.