HM Treasury Crypto Policy and Regulations: What You Need to Know in 2026

The UK government isn’t waiting for crypto to settle down-it’s stepping in with clear rules. As of January 2026, the HM Treasury crypto policy and regulations are no longer proposals. They’re law. And if you’re trading, issuing, or holding crypto in the UK, you need to understand what changed and how it affects you.

What Exactly Is Regulated Now?

Before April 2025, crypto firms in the UK operated in a gray zone. Some registered with the FCA for anti-money laundering checks. But there was no real oversight of how they operated. That ended with the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025. This isn’t a minor tweak. It’s the first time crypto activities are treated like traditional financial services under UK law.

Five core activities now require FCA authorization:

• Operating a cryptoasset trading exchange
• Issuing qualifying stablecoins
• Dealing in qualifying cryptoassets
• Providing custody services for cryptoassets
• Arranging transactions in qualifying cryptoassets

If your business does any of these for UK customers, you must apply for FCA authorization by the deadline. No exceptions. No loopholes. Firms that don’t comply face fines, suspension, or criminal charges.

What Counts as a ‘Qualifying’ Cryptoasset?

Not all crypto is treated the same. The law draws a line between two types:

• Qualifying cryptoassets: These are tokens that aren’t stablecoins but still have economic value tied to market demand-like Bitcoin, Ethereum, or Solana. They’re regulated when traded, held in custody, or arranged for others.
• Qualifying stablecoins: These are tokens pegged to a stable asset like the pound or euro. Only stablecoins issued by UK-based entities fall under this category. So if you’re using Tether or USDC, you’re still protected under consumer rules-but the issuer isn’t regulated unless they’re based in the UK.

This territorial rule is critical. A US-based stablecoin issuer can still sell to UK customers. But if a UK company tries to launch its own pound-backed stablecoin, it must get FCA approval, meet capital requirements, and prove it can redeem tokens on demand. That’s a big barrier for small players.

What’s Not Regulated (And Why It Matters)

The Treasury didn’t try to control everything. Decentralized finance (DeFi) protocols that truly have no central team or controlling entity are excluded. If there’s no company, no CEO, no headquarters-you’re not regulated.

This isn’t a loophole. It’s a deliberate design choice. Regulators know you can’t force a smart contract to apply for a license. So instead, they focus on the human actors: exchanges, issuers, custodians. If you’re using Uniswap or Aave from your wallet, you’re not breaking any rules. But if a UK firm builds a DeFi platform with a central team managing fees or upgrades, they’re now in scope.

This distinction helps the UK stay competitive. While the EU tried to regulate all DeFi under MiCA, the UK’s approach lets innovation happen outside the system-while still protecting consumers from centralized intermediaries.

How This Compares to Other Countries

The UK didn’t start from scratch. It borrowed heavily from the EU’s MiCA regulation. The structure of regulated activities, the focus on stablecoins, and the requirement for authorization are all similar.

But there are key differences:

Comparison of UK and EU Crypto Regulation Approaches

Feature	UK (HM Treasury 2025)	EU (MiCA)
Stablecoin Issuers	Only UK-based issuers regulated	All stablecoins sold in EU regulated, regardless of origin
DeFi Exclusion	Explicitly excluded if truly decentralized	No clear exclusion; some DeFi services may fall under scope
Regulatory Body	FCA (extends existing framework)	New EU-wide authority + national regulators
Implementation Timeline	Phased, with FCA rulebooks rolling out through 2026	Full rollout by 2026, with strict deadlines

The UK’s narrower scope on stablecoins gives local issuers a chance to compete. It also means UK consumers using foreign stablecoins still have protections-but through different rules, like anti-fraud laws and exchange licensing.

What Firms Need to Do Now

If you run a crypto business in the UK, here’s your checklist:

1. Identify which of the five regulated activities your firm performs.
2. Check if you’re a UK-based issuer of a stablecoin. If yes, you’re in scope.
3. Review whether your operations involve non-UK customers. Even foreign firms must comply if they target UK users.
4. Start preparing your FCA application. You’ll need proof of financial resilience, AML procedures, and consumer protection policies.
5. Update your terms of service and disclosures to reflect new regulatory status.

Traditional banks and financial firms already licensed by the FCA have an easier path. They can often extend existing systems to cover crypto. But crypto-native startups? They’re building compliance from the ground up. Many are hiring legal teams, upgrading KYC systems, and setting up segregated client asset accounts-all at significant cost.

Anti-Money Laundering Just Got Tighter

In September 2025, HM Treasury released draft amendments to the Money Laundering Regulations. These now require crypto firms to:

• Perform enhanced customer due diligence on high-risk clients
• Report suspicious activity using the same systems as banks
• Keep records of pooled client accounts for up to five years
• Register trusts holding crypto assets with the UK Trust Registration Service

This isn’t optional. The FCA will audit firms for compliance. Fines for failing to report suspicious transactions can hit £1 million or more. Even small exchanges are now expected to monitor transactions like a bank.

What’s Coming Next?

The 2025 Order is just the first step. Two more major pieces are on the way:

• Market Abuse Rules: These will ban insider trading and market manipulation in crypto markets. Think of it like the rules that prevent stock traders from dumping shares after a secret merger.
• Admissions and Disclosures: Firms will need to publish clear, standardized information about their tokens-risk warnings, fees, redemption policies-before listing them.

The FCA is expected to release detailed rulebooks by mid-2026. These will spell out exactly how to meet each requirement. Until then, firms are operating under a ‘reasonable steps’ standard-do what a prudent financial firm would do.

Why This Matters for You

If you’re a retail investor: You’re safer now. Crypto firms must hold your assets separately from their own. They can’t lend them out without your consent. If a firm goes bust, you have a clearer path to recover your holdings.

If you’re a business: The rules are harder-but they’re clear. No more guessing. You know what’s allowed and what’s not. That’s good for long-term planning. But it also means the cost of entry has risen. Smaller firms may struggle. Some may leave the UK market.

If you’re a developer or DeFi user: You’re largely unaffected. As long as you’re not running a centralized platform, you can still use wallets, smart contracts, and decentralized apps without interference.

Bottom Line

The UK isn’t banning crypto. It’s bringing it into the financial system-with rules that match traditional banking. The goal isn’t to kill innovation. It’s to stop fraud, protect consumers, and make London a credible hub for compliant crypto businesses.

The clock is ticking. Firms have until the end of 2026 to get fully authorized. If you’re waiting for a delay, you’re risking your business. The Treasury isn’t backing down. The rules are final. Now it’s up to you to adapt.