On 29 April 2025, HM Treasury published a draft of the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, setting out a new regulatory regime for cryptoassets, that will bring digital asset activities officially within the scope of the Financial Services and Markets Act 2000 (FSMA); a key step forward in the UK’s phased approach to digital finance regulation.
Proposed Amendments to FSMA
The proposed Order introduces a suite of newly regulated activities designed to capture a broad range of cryptoasset services. These include:
- Operating cryptoasset trading platforms;
- safeguarding digital assets (custody);
- dealing in cryptoassets as principal or agent;
- arranging transactions;
- facilitating staking services; and
- issuing fiat-referenced stablecoins.
These amendments take an activity-based approach, focusing on the nature of the service provided rather than delving into the nuance of the intricate technology, such as the type of token or underlying infrastructure. This approach effectively extends to exchanges, custodians, brokers, and stablecoin issuers, all of whom will be subject to standards aligned with those governing traditional financial institutions.
The draft Order is part of the the second phase of the UK’s broader crypto regulatory strategy and builds on earlier consultations and policy papers, including HM Treasury’s initial consultation in 2022 and the follow up response in 2023. It amends the Regulated Activities Order (RAO) under FSMA, creating new categories of regulated cryptoasset activities and leveraging statutory definitions introduced in the Financial Services and Markets Act 2023.
The draft Order also makes amendments to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (S.I. 2005/1529), by removing the exemption that allows firms registered only under the Money Laundering Regulations 2017 with the FCA to self-approve financial promotions. Moving forward, only firms authorised under FSMA will be permitted to promote cryptoasset activities to UK consumers, and AML registration alone will no longer be sufficient, although fully authorised firms will not need to maintain a separate AML crypto registration.
From a practical standpoint, the new framework has wide reaching scope, applying to both UK-based firms and overseas entities that actively target UK customers. A temporary transitional regime will allow crypto firms already registered under the UK’s AML framework to continue operating whilst they apply for full FSMA authorisation, with final implementation expected in 2026.
However, firms not already registered will not benefit from this transitional relief and must act quickly to assess their regulatory position. Many firms may need to establish UK-authorised entities and implement governance, capital, and risk controls equivalent to those expected of regulated financial services providers.
