For nearly a decade, crypto regulation in the UK has lived in a continuous updation space. Cryptoassets were neither fully outside the financial system nor clearly inside it. Instead, they sat on the edge touched by anti-money laundering rules, nudged by consumer warnings, but largely untouched by the core architecture of financial regulation. Similar in lines with Singapore. That phase is now coming to an end.
Taken together, the FCA’s recent consultation papers and the draft amendments to the Regulated Activities Order mark a clear shift in approach. The UK is no longer asking whether crypto should be regulated like financial services, but how to do so in a way that fits market reality, protects consumers, and preserves room for innovation. This is not a ban, and it is not a light-touch experiment either. It is a deliberate move towards regulatory maturity.
Until now, most crypto firms in the UK have been regulated primarily through the lens of financial crime. Registration under the money laundering regime became the de facto gateway into the market, even though those rules were never designed to address consumer harm, market integrity, or operational resilience. But the new framework acknowledges this gap.
By bringing key crypto activities explicitly within the regulated activities perimeter, the UK is aligning crypto regulation with the risks these businesses actually pose. Issuance, custody, trading platforms and dealing are no longer treated as peripheral activities but as financial services functions that warrant authorisation, supervision and ongoing oversight.
This matters because it shifts the regulatory conversation. Firms are no longer assessed only on their controls against illicit finance, but also on governance, systems, disclosures, conflicts of interest and consumer outcomes. Though this was deliberated in the consultation papers released back in mid 2025 as well but this time it is quite clear.
One of the most important signals in the new regime is how the UK treats stablecoins. The proposals treat certain stablecoins as part of the payments ecosystem. Issuance and redemption are regulated as financial activities, with a strong focus on backing, redemption rights and operational reliability. They have made a distinction between qualifying stablecoins and UK issued qualifying stablecoins.
The regime avoids trying to regulate the underlying technology itself. Minting and design are largely excluded from regulation. What matters is not how a stablecoin is created, but how it is offered, redeemed and maintained. That distinction reflects a broader regulatory principle: regulate outcomes and risks, not code.
Crypto failures over the past few years have repeatedly shown that custody is not a neutral service. Control over private keys means control over assets, and weak custody arrangements have led directly to consumer losses. The new framework responds to this reality by treating crypto custody as a regulated activity in its own right. Importantly, the definition of “safeguarding” is broad. It captures not only firms that directly hold assets, but also those that control access, arrange custody through others, or structure group-level arrangements that affect who ultimately bears responsibility. This closes a long-standing regulatory blind spot. Firms can no longer rely on technical distinctions or outsourcing structures to sit outside regulation while still exercising effective control over customer assets.
Trading platforms and dealers
Crypto trading platforms have historically operated with far fewer constraints than traditional financial markets. Conflicts of interest, opaque pricing, and blurred lines between agency and principal trading have been common. By designating crypto trading platforms and dealing activities as regulated, the UK is signalling that market integrity standards apply regardless of asset type. This does not mean copying and pasting securities regulation wholesale. But it does mean importing core expectations: transparency, fair access, orderly markets and clear accountability. The focus is on behaviour, not branding. If a platform functions like a market, it should be regulated like one.
A striking feature of the FCA’s approach is its attempt to balance consumer protection with consumer agency. Rather than banning access or assuming that all crypto users are uninformed, the framework leans on disclosures, conduct standards and suitability-adjacent safeguards. Firms are expected to explain risks clearly, avoid misleading promotions, and structure products responsibly. This reflects a broader shift in financial regulation away from blanket prohibitions and towards informed choice. Consumers are protected not by being locked out, but by being given accurate information and dealing with accountable firms.
A signal to Global Markets
Perhaps the most important impact of this regime is not domestic, but global. By embedding crypto within its existing financial services framework, the UK is sending a signal that crypto is not an exceptional category that sits outside the rule of law. It is part of the financial system and will be regulated accordingly. For international firms, this offers clarity. For domestic firms, it offers legitimacy. And for regulators elsewhere, it provides a model that sits between the extremes of laissez-faire and outright prohibition.
These proposals do not solve every problem. Implementation will be complex, supervisory capacity will be tested, and firms will face real compliance costs. But that is precisely what regulatory maturity looks like. Crypto in the UK is moving from experimentation to integration. From perimeter debates to supervisory practice. From slogans about innovation to hard questions about responsibility. For the UK crypto is no longer a regulatory side-project. It is financial services and it is being treated as such.
In the Indian context, a comparable moment of transition appears to be underway, albeit through a more incremental and tax-driven route. Since 2022, India has brought cryptoassets within a formal fiscal and compliance architecture through amendments to the Income-tax Act, 1961 (introducing taxation on Virtual Digital Assets) and the extension of anti-money laundering obligations under the Prevention of Money Laundering Act, 2002 to crypto intermediaries. Registration with the Financial Intelligence Unit – India has, much like the UK’s earlier phase, functioned as the principal regulatory gateway. However, this framework remains largely anchored in financial crime and reporting obligations, without yet fully addressing prudential regulation, market conduct, custody standards or consumer protection in a comprehensive manner.
That said, policy signals suggest that India may gradually converge towards a more integrated model of regulation. Discussions within the Reserve Bank of India and the Ministry of Finance indicate a growing recognition that crypto activities particularly exchanges, custodial services and stablecoin-linked arrangements – raise risks analogous to traditional financial services. India’s emphasis at international forums such as the G20 further underscores its preference for calibrated, globally coordinated standards rather than unilateral liberalisation. If the UK’s current framework represents regulatory maturity through integration, India appears to be at a pre-integration stage – where the contours of a broader financial regulatory architecture are being debated, but not yet fully operationalised.