UK FCA's new crypto rulebook wins praise for openness, but licensing hurdles still loom

The UK Financial Conduct Authority (FCA) on July 5 published its long-awaited regulatory framework for cryptoassets, drawing a broadly positive reaction from parts of the industry while leaving key compliance questions unresolved. Market participants said the regime could bolster the UK's appeal as a digital-asset centre by keeping access to global liquidity intact and allowing stablecoins issued outside the UK to continue circulating. Under the framework, eligible overseas trading venues may serve UK clients via authorised UK-based branches and link into global liquidity pools, rather than being forced into a ring-fenced, UK-only liquidity market. Industry sources expect that approach to support tighter pricing and better market efficiency. The rules also keep the door open to non-UK stablecoins, a posture viewed as more permissive than the EU's Markets in Crypto-Assets Regulation (MiCA). Even so, firms say material uncertainty remains. The FCA has yet to specify which overseas jurisdictions will be deemed to offer "equivalent regulatory protection", complicating planning for cross-border operators. Policy for DeFi is also still undefined, and some analysts warn that if centralised platforms face limits on accessing DeFi applications, the UK could lose ground to competing markets such as the United States. Analysts added that the new authorisation process is expected to be far more demanding than the current AML registration regime, introducing broader obligations spanning consumer protection, prudential standards, operational resilience and senior management accountability. Industry observers said the UK's prospects of becoming a global crypto hub will ultimately hinge on how quickly the FCA clarifies implementation details and how predictable the approvals process proves to be.