The United Kingdom is rapidly evolving its regulatory stance on cryptocurrencies and digital assets, positioning itself as a forward-thinking jurisdiction in the global fintech landscape. As the government moves toward comprehensive legislation, businesses and investors must stay informed about compliance requirements, registration processes, and upcoming changes in 2025 and beyond.
This guide breaks down the current state of UK crypto regulations, key regulatory bodies, compliance obligations, and what the future holds for crypto asset service providers (CASPs) and custodian wallet providers.
Who Regulates Crypto in the UK?
The Financial Conduct Authority (FCA) is the primary regulator overseeing crypto-related activities in the UK. It enforces Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) rules under the Money Laundering Regulations 2017 (MLR 2017) and ensures that firms adhere to strict advertising standards when promoting crypto financial products.
Other key institutions involved in shaping crypto policy include:
- HM Treasury – responsible for drafting overarching financial regulations and proposing new legislative frameworks.
- The Bank of England – contributes to systemic risk assessments, particularly concerning stablecoins and payment systems.
Together, these bodies are working to create a balanced ecosystem that fosters innovation while protecting consumers and maintaining financial stability.
Core UK Crypto Regulations
Crypto businesses operating in or targeting the UK market must comply with several critical legal frameworks:
Money Laundering Regulations 2017 (MLR 2017)
This remains the cornerstone of AML compliance for crypto firms. Amended in 2019 to incorporate the EU’s Fifth Anti-Money Laundering Directive (AMLD5), it was further updated in 2022 to implement the Travel Rule, requiring the sharing of sender and recipient data during crypto transfers.
👉 Discover how seamless compliance can streamline your crypto operations.
Financial Services and Markets Act 2000 & 2023
These acts define regulated financial activities. If a firm deals with security tokens, they fall under this regime and require full FCA authorization.
Electronic Money Regulations 2011 & Payment Services Regulations 2017
Apply to firms whose operations overlap with e-money or payment services, especially those integrating crypto with traditional finance.
Which Businesses Are Affected?
Under MLR 2017, two main categories of crypto businesses are subject to regulation:
Crypto Asset Service Providers (CASPs) – Firms that:
- Exchange crypto for fiat or vice versa
- Facilitate exchanges between different cryptocurrencies
- Operate automated crypto exchange machines (e.g., ATMs)
- Custodian Wallet Providers – Companies that safeguard private keys or manage crypto assets on behalf of clients.
If your business performs any of these functions and has a UK presence—or markets services to UK consumers—you likely need FCA registration.
Do You Need to Register with the FCA?
Registration is mandatory if your business:
- Markets crypto services to UK residents
- Operates from a UK office or manages operations from within the UK
- Runs ATMs that facilitate crypto-fiat exchanges
- Benefits financially from crypto asset services provided in the UK
Even if your company is based overseas, marketing to UK users triggers regulatory obligations. The FCA considers such activity as conducting business in the jurisdiction.
👉 Stay ahead of regulatory changes with tools built for global compliance.
Step-by-Step: How to Register with the FCA
To begin the registration process:
- Confirm whether your activities meet the FCA’s definition of a crypto asset business using their official flowchart.
- Appoint a Money Laundering Reporting Officer (MLRO).
- Develop robust AML/CFT policies, including risk assessments and internal controls.
- Implement a Customer Due Diligence (CDD) process.
- Submit an application via the FCA’s online portal, providing detailed documentation on governance, systems, and compliance procedures.
The review process can take several months, so early preparation is essential.
Key AML Compliance Requirements
To remain compliant, firms must establish comprehensive AML programs that include:
- Staff training on fraud detection and regulatory obligations
- Regular risk assessments tailored to business models
- CDD, SDD, and EDD checks based on customer risk levels
- Screening against sanctions lists and Politically Exposed Persons (PEPs)
- Continuous transaction monitoring
- Maintaining records for at least five years
- Reporting suspicious activity to the National Crime Agency (NCA)
At onboarding, collect at minimum:
- Full legal name
- Date of birth
- Residential address
Verification should be done using government-issued IDs, bank statements, or utility bills.
Understanding the UK Crypto Travel Rule
Aligned with FATF Recommendation 16, the UK’s Travel Rule mandates that CASPs collect and share originator and beneficiary information during inter-entity crypto transfers.
Key points:
- No de minimis threshold: Data sharing is required for all transactions.
- For transfers equal to or exceeding €1,000, additional details must be transmitted.
- Applies to both hosted wallets and transactions involving unhosted wallets.
Originating CASPs must verify sender information using reliable sources before sending funds. Beneficiary CASPs must confirm the received data matches their own CDD records before releasing assets.
Failure to comply may result in delays, returns, or reporting to the FCA—especially in cases of repeated non-compliance by counterparties.
The Future of Crypto Regulation in the UK
The UK is moving toward a more structured and expansive regulatory environment. Key developments include:
Property (Digital Assets) Bill
Currently under review in the House of Lords, this bill aims to legally recognize crypto assets as property in England and Wales. This would strengthen legal protections for owners and improve recourse in cases of theft or fraud.
Similar consultations are underway in Scotland and Northern Ireland.
Stablecoin Regulation
The Bank of England and FCA are developing a world-first regulatory framework for payment stablecoins, treating them similarly to e-money or electronic payment systems.
Expanded Regulatory Scope
Future rules may cover:
- Crypto lending and borrowing
- Staking services
- Governance participation (e.g., voting rights via tokens)
- Market abuse prevention (e.g., insider trading, pump-and-dump schemes)
HM Treasury plans to monitor both domestic firms serving international clients and foreign firms targeting UK users—ensuring broader oversight.
Frequently Asked Questions
Is cryptocurrency legal in the UK?
Yes. Cryptocurrency is legal to buy, sell, and hold in the UK. However, it is not legal tender, meaning businesses are not obligated to accept it as payment.
Is cryptocurrency regulated in the UK?
Yes. While individuals can freely own crypto, businesses engaging in crypto asset services must register with the FCA and comply with AML/CFT regulations.
What is the new UK crypto regulation?
The UK is introducing several major updates:
- Recognizing digital assets as property via the Property (Digital Assets) Bill
- Expanding FCA oversight to include stablecoins and lending platforms
- Strengthening consumer protections against market manipulation
- Implementing stricter advertising rules for crypto promotions
What is the FATF Travel Rule?
Also known as Recommendation 16, it requires Virtual Asset Service Providers (VASPs) to collect, verify, and share sender and receiver information during transfers to prevent illicit financial flows.
What is the Travel Rule threshold in the UK?
There is no minimum transaction threshold—the rule applies to all transfers. However, enhanced data requirements kick in for transactions of €1,000 or more.
How can businesses prepare for upcoming regulations?
Start by ensuring full FCA registration, implementing robust KYC/AML systems, and staying updated on legislative developments like the Future Financial Services Regime for Crypto Assets consultation.
👉 Access advanced tools designed to meet evolving regulatory demands.
Final Thoughts
As the UK positions itself as a leader in responsible crypto innovation, regulatory clarity is improving—but so are compliance expectations. Whether you're a startup launching a crypto platform or an established firm expanding into digital assets, understanding your obligations under current and upcoming laws is crucial.
By proactively aligning with FCA requirements, leveraging automated compliance solutions, and monitoring legislative progress like the Property (Digital Assets) Bill, businesses can operate confidently in this dynamic environment.
The era of unregulated crypto activity in the UK is ending. The future belongs to those who adapt early.