UK’s New Crypto Rulebook Wins Praise, But Authorization Hurdles Loom

The United Kingdom’s Financial Conduct Authority (FCA) has unveiled its long-awaited cryptocurrency regulatory framework, drawing early praise from industry participants for its internationally connected design, according to CoinDesk. Yet significant questions remain over whether the rules can help Britain establish itself as a global crypto hub, as firms brace for a demanding authorization process.

Unveiled this week, the FCA’s package preserves access to global liquidity through overseas trading venues and permits non-U.K.-issued stablecoins to circulate in the country, industry figures told CoinDesk. Katie Harries, Coinbase’s head of policy for Europe, called the publication of the final rules “a major milestone for regulatory clarity and a strong outcome for the U.K.’s competitiveness in digital asset innovation,” in comments made via Telegram.

A contrast with Europe’s MiCA

Many in the industry see the FCA’s stance on global liquidity and offshore stablecoins as a deliberate departure from the European Union’s Markets in Crypto-Assets (MiCA) regulation, which they view as more protectionist in encouraging firms to ring-fence European liquidity and operations.

Central to this approach is the FCA’s new Qualifying Cryptoasset Trading Platform (QCATP) model, which would let overseas exchanges serve U.K. customers through locally authorized branches linked to existing global trading infrastructure, according to Christopher Collins, a financial markets and regulation partner at Katten Muchin Rosenman.

“The benefit of such an approach is allowing access for U.K. customers to established global liquidity in the offshore trading platform, rather than having a ring-fenced U.K. liquidity pool, which should mean better pricing and outcomes for U.K. customers,” Collins said in an emailed comment cited by CoinDesk.

However, Collins flagged an unresolved issue: the FCA has said overseas branches will only be authorized if their home jurisdiction offers “comparable levels of regulatory protection,” but it has not yet specified which countries qualify. “That isn’t enough clarity for firms to build a business model,” he said, arguing companies need more certainty before committing to U.K. operations.

DeFi access remains uncertain

Harries also pointed to decentralized finance (DeFi) as an open question, warning that earlier proposals could have effectively blocked centralized platforms from offering access to DeFi applications. “The U.K.’s future approach to DeFi will be critical,” she said, cautioning that overly restrictive rules would leave Britain out of step with jurisdictions such as the United States, where regulators are exploring DeFi within broader tokenization strategies.

Authorization process seen as demanding

Beyond policy design, firms face a tough road to authorization. Thomas Cattee, a partner at Gherson Solicitors, warned there is “a very high risk of failure” for companies applying under the new Financial Services and Markets Act regime.

“The existing AML registration process with the FCA, which is much narrower, is already incredibly demanding, with the FCA rejecting or forcing the withdrawal of over 85% of applications,” Cattee said, according to CoinDesk. The new framework adds broader requirements spanning Consumer Duty, prudential standards, operational resilience and senior management accountability.

Cattee also urged firms not to delay applications, referencing MiCA’s rollout in Europe, where many companies waited until deadlines neared, causing licensing bottlenecks that left some businesses without timely authorization.

Institutional adoption hinges on legal clarity

For institutional investors, the framework represents more than just another rulebook. Sandy Jones, director of digital assets at Baillie Gifford, said regulation alone does not make crypto safer, but it supplies the legal certainty and governance standards traditional finance needs before adopting blockchain-based infrastructure.

“The underlying technology is powerful, but it does not create a direct path into mainstream financial markets on its own,” Jones said. “You need legal clarity, operational resilience, proper governance and rules that investors and institutions can recognise.” Jones also welcomed the FCA’s recent adjustments to its stablecoin regime, saying they build robust settlement infrastructure without adding unnecessary operational friction.

Industry reaction suggests the FCA has deliberately positioned the U.K. as a commercially pragmatic alternative to the EU’s MiCA regime. Whether that translates into firms choosing Britain over other jurisdictions, according to CoinDesk, will depend less on the framework’s ambition than on how predictably it is implemented in the months ahead.

Read more: Germany’s Biggest Banking Networks Prepare Retail Crypto Trading Under MiCA