Cryptoasset Licensing: Preparing for the September 2026 Deadline

The UK's cryptoasset industry stands at a pivotal moment. With the September 2026 deadline for FCA authorisation rapidly approaching, firms operating in this space face a fundamental transformation in how they conduct business. This comprehensive guide examines what the new licensing regime entails, which activities fall within scope, and how firms should prepare for this regulatory watershed.

The End of the Registration Regime

Since January 2020, cryptoasset businesses operating in the UK have been required to register with the Financial Conduct Authority under the Money Laundering Regulations. This registration regime, whilst establishing baseline anti-money laundering controls, was never intended as a permanent solution. The FCA has been clear that registration does not constitute authorisation and provides no assurance regarding a firm's broader conduct or financial soundness.

The new framework, introduced through amendments to the Financial Services and Markets Act 2000, represents a fundamental shift from registration to full authorisation. From September 2026, firms wishing to carry on cryptoasset activities in the UK must obtain FCA authorisation under the new regime. The previous registration will no longer suffice.

This change reflects the government's ambition to position the UK as a global hub for cryptoasset technology and investment, whilst ensuring robust consumer protection and market integrity. The regulatory perimeter is expanding significantly, bringing cryptoassets into the mainstream of financial regulation.

Scope of the New Regime

Regulated Cryptoasset Activities

The new framework introduces a comprehensive suite of regulated activities relating to cryptoassets. Firms will require authorisation if they carry on any of the following activities by way of business in the UK:

Trading and Exchange Services

Operating a cryptoasset trading venue
Dealing in cryptoassets as principal or agent
Arranging deals in cryptoassets
Making a market in cryptoassets

Custody and Safeguarding

Safeguarding or administering cryptoassets on behalf of clients
Operating cryptoasset custody services
Providing wallet services where the firm holds private keys

Staking and Validation

Operating a cryptoasset staking service
Running validation nodes on behalf of clients
Providing delegation services for proof-of-stake networks

Decentralised Finance Activities

Operating lending or borrowing platforms involving cryptoassets
Providing liquidity pool services
Operating decentralised exchange protocols where the firm maintains control

Advisory and Management Services

Advising on cryptoassets
Managing cryptoasset portfolios
Operating collective investment schemes investing in cryptoassets

Territorial Scope

The regime applies to firms carrying on regulated cryptoasset activities in the UK. This includes:

UK-based firms serving domestic or overseas clients
Overseas firms actively marketing to or serving UK consumers
Firms operating platforms accessible to UK users

The FCA has indicated it will take a purposive approach to territorial scope, focusing on where activities have their effect rather than where infrastructure is technically located.

Prudential Requirements

One of the most significant changes under the new regime is the introduction of comprehensive prudential requirements for cryptoasset firms. These requirements are calibrated according to the nature and scale of a firm's activities.

Capital Requirements

Firms will be required to maintain minimum own funds based on their regulatory classification:

Tier 1 Firms (trading venues, large custodians, stablecoin issuers)

Minimum initial capital of £750,000
Ongoing capital requirements based on operational risk and client asset exposure
Additional buffers for market-making activities

Tier 2 Firms (dealers, arrangers, advisers)

Minimum initial capital of £150,000
Fixed overhead requirement of at least three months' expenses
Client money segregation obligations

Tier 3 Firms (smaller intermediaries, introducers)

Minimum initial capital of £50,000
Simplified prudential regime with proportionate requirements

Liquidity Requirements

All authorised cryptoasset firms must maintain adequate liquid resources to meet obligations as they fall due. The specific requirements vary by firm type but include:

Basic liquid asset requirements
Stress testing for operational continuity
Recovery and resolution planning for larger firms

Client Asset Protection

Firms holding client cryptoassets must comply with enhanced safeguarding rules, including:

Strict segregation of client and firm assets
Use of appropriate custody arrangements
Regular reconciliation and reporting
Insurance or capital coverage for custody risks

Market Conduct and Disclosure

Market Abuse Regime

The new framework extends market abuse provisions to cryptoassets, creating criminal and civil liability for:

Insider dealing in cryptoassets
Market manipulation, including wash trading and spoofing
Improper disclosure of inside information

Firms operating trading venues will be required to implement market surveillance systems and report suspicious transactions to the FCA.

Disclosure Requirements

Cryptoasset issuers and trading venues will be subject to new disclosure obligations:

Admission Documents

Detailed disclosures for cryptoassets admitted to trading
Information on technology, governance, and risk factors
Ongoing disclosure of material changes

Consumer Disclosures

Clear risk warnings
Fee transparency
Product information requirements

Periodic Reporting

Annual and interim financial statements for larger firms
Regulatory returns on trading volumes and client positions
Complaints and operational incident reporting

Stablecoin-Specific Requirements

The regime introduces a distinct framework for stablecoin issuance and services, reflecting the particular risks these instruments pose to financial stability and consumer protection.

Fiat-Backed Stablecoin Issuers

Firms issuing fiat-backed stablecoins must:

Obtain specific authorisation as a stablecoin issuer
Maintain reserves equal to 100% of outstanding tokens
Hold reserves in high-quality liquid assets
Provide redemption rights to holders
Publish regular reserve attestations
Submit to enhanced supervision

Stablecoin Service Providers

Firms providing custody, exchange, or payment services for stablecoins will be subject to additional requirements around:

Reserve verification
Redemption facilitation
Consumer communication

Systemic Stablecoins

Stablecoins reaching systemic scale will be subject to additional requirements under Bank of England oversight, including:

Enhanced reserve requirements
Recovery and resolution planning
Restrictions on reserve investment

Transitional Arrangements

The FCA has established transitional arrangements to facilitate an orderly transition to the new regime.

Currently Registered Firms

Firms holding valid FCA cryptoasset registration as of the transition date may continue operating under temporary permission whilst their authorisation application is being considered, provided they:

Submit a complete authorisation application by 30 June 2026
Continue to comply with existing registration conditions
Meet enhanced reporting requirements during the transitional period

New Market Entrants

Firms not currently registered should apply for authorisation well in advance of September 2026. The FCA has indicated that applications submitted after 30 June 2026 may not be determined before the deadline, leaving firms unable to operate legally.

Firms Exiting the Market

Firms choosing not to seek authorisation must wind down their UK cryptoasset activities by September 2026. This includes:

Returning client assets
Closing positions
Notifying customers of cessation

The Application Process

Pre-Application

Before submitting a formal application, firms should:

Assess regulatory perimeter - Determine which activities require authorisation
Gap analysis - Identify areas requiring development to meet authorisation standards
Business plan refinement - Develop detailed projections and operating model documentation
Governance enhancement - Ensure board composition and senior management meet FCA expectations
Systems and controls - Implement necessary compliance, risk management, and operational infrastructure

The FCA offers pre-application meetings for complex cases, and firms are encouraged to engage early with supervisors.

Application Requirements

A complete authorisation application must include:

Regulatory business plan
Financial projections and capital adequacy assessment
Organisational structure and governance arrangements
Senior manager and certification regime applications
Systems and controls documentation
Compliance monitoring arrangements
Outsourcing and operational resilience documentation
Client asset arrangements
Financial crime prevention framework

Determination Timeline

The FCA has committed to determining complete applications within six months. However, given the volume of applications expected, firms should anticipate potential delays and plan accordingly. Applications with deficiencies or requiring significant additional information may take considerably longer.

Key Consultation Papers

Firms preparing for authorisation should familiarise themselves with the key policy documents shaping the new regime:

CP25/40 - The primary consultation paper setting out the proposed rules for cryptoasset activities, including:

Detailed prudential requirements
Conduct of business rules
Market abuse provisions
Stablecoin framework

PS26/XX (expected Q2 2026) - The policy statement confirming final rules following consultation

FG26/X (expected) - Guidance on the authorisation process and FCA expectations

The FCA has indicated it will publish further technical guidance as the regime approaches implementation.

Preparing Your Firm

With less than five months until the deadline, firms should be well advanced in their preparation. Key priorities include:

Immediate Actions

Complete gap analysis against final rules
Finalise authorisation application if not yet submitted
Enhance capital position to meet prudential requirements
Implement market abuse systems and surveillance capabilities

Ongoing Preparation

Train staff on new regulatory obligations
Update policies and procedures to reflect authorisation requirements
Review client documentation and disclosures
Test operational resilience arrangements

Strategic Considerations

Assess business model viability under the new regime
Consider corporate restructuring if prudential requirements necessitate
Evaluate partnerships with authorised firms for activities you may not pursue directly
Plan client communication regarding regulatory changes

The Opportunity Ahead

Whilst the new authorisation requirements represent a significant compliance burden, they also present opportunities for well-prepared firms. Authorisation will provide:

Enhanced credibility with institutional clients and counterparties
Access to mainstream financial services partnerships
Clearer regulatory framework supporting business planning
Competitive differentiation from unauthorised overseas competitors

The UK's comprehensive approach to cryptoasset regulation positions the market favourably compared to jurisdictions with fragmented or unclear frameworks.

How MEMA Can Help

Navigating the transition to full FCA authorisation requires expertise in both traditional financial services regulation and the unique characteristics of cryptoasset markets. MEMA Consultants brings deep experience across both domains.

Our cryptoasset authorisation services include:

Regulatory perimeter analysis - Determining which activities require authorisation and optimal structuring
Gap analysis and remediation planning - Identifying areas requiring development and practical solutions
Application preparation - Drafting comprehensive authorisation applications to FCA standards
Governance and senior management - Advising on board composition, SM&CR applications, and governance frameworks
Prudential compliance - Capital and liquidity planning, client asset arrangements, and ongoing compliance
Policies and procedures - Developing compliant operational frameworks tailored to your business
Project management - Coordinating complex authorisation programmes to meet regulatory deadlines

With the September 2026 deadline approaching rapidly, early engagement is essential. Our team can assess your current position, identify priority actions, and develop a clear pathway to authorisation.

Contact MEMA today to discuss your cryptoasset authorisation requirements and ensure your firm is prepared for the new regulatory landscape. Time is short, but with proper planning and expert support, authorisation is achievable.

This article is for general information purposes only and does not constitute legal or regulatory advice. Firms should seek specific guidance on their individual circumstances.