UK Crypto Assets Regulatory Regime Set to Bring Significant Changes

The UK's investment management industry is bracing itself for a significant change with the introduction of a new regulatory regime for crypto assets. As reported by the Financial Conduct Authority (FCA), the rules will come into effect on October 25, 2027, and will bring a wide range of crypto-related activities under full FCA regulation for the first time.

The Investment Association (IA) has released a report to help fund managers navigate this new landscape. The report, which was produced in collaboration with law firm Travers Smith, provides guidance on how firms can adapt their business models to comply with the new rules.

According to the IA, firms should begin planning for variations of permission applications or FCA authorisation if they are currently engaged in digital markets. Even if their activities fall outside the new regulatory framework, firms should ensure registration under the existing Money Laundering, Terrorist Financing and Transfer of Funds (MLRs) crypto asset regime where required.

The report also highlights the need for firms to continue monitoring FCA guidance and supervisory statements, which may help clarify areas of uncertainty within the new framework. With the deadline for implementation just over two years away, fund managers are being urged to take proactive steps to ensure they are prepared for the changes ahead.