UK
Future UK crypto regime
The countdown to the UK’s future crypto framework has now begun. On December 15, 2025, HM Treasury published the final text of the UK’s cryptoasset legislation, which will bring currently unregulated cryptoasset and stablecoin activities within the scope of the UK financial services regime. This follows a consultation on the draft legislation in April 2025. The legislation has now been laid before Parliament, and the “go-live” date for the new licensing regime is October 25, 2027.
The legislation in question is the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025. They set out the legal basis for the Financial Conduct Authority (FCA) to regulate a range of activities in the UK in respect of “qualifying cryptoassets” and “qualifying stablecoins”. The Regulations amend the existing Financial Services and Markets Act (Regulated Activities) Order 2001 to specify new regulated activities including: (i) issuing qualifying stablecoin; (ii) safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets; (iii) operating a qualifying cryptoasset trading platform; (iv) dealing in qualifying cryptoassets as principal or agent; (v) arranging deals in qualifying cryptoassets; and (vi) making arrangements for qualifying cryptoasset staking. Going forward, firms carrying out these new regulated activities will need to be licensed under the Financial Services and Markets Act 2000.
Firms which offer cryptoasset or stablecoin-related services to UK customers will generally be caught by the new rules even if they operate from overseas. A tailored licensing regime for stablecoin issuance will only be available to firms established in the UK; however, activities involving off-shore-issued stablecoins are still likely to require licensing under other categories set out in the previous paragraph. Limited exclusions from licensing will apply.
New provisions included in the Regulations also create “designated activities” relating to public offers of qualifying cryptoassets and the admission of qualifying cryptoassets to trading. Such designated activities will not be subject to licensing but will be subject to rules, for example rules on disclosures/white papers. Exemptions apply in limited circumstances.
Under the Regulations, a crypto-specific market abuse regime will also apply to relevant qualifying cryptoassets admitted or seeking admission to trading, and to related instruments, mirroring familiar market abuse concepts: inside information, insider dealing, unlawful disclosure and market manipulation. Firms within scope must implement systems and procedures to prevent, detect and disrupt abuse, notify trading platforms of suspicious orders/transactions, maintain insider lists, and comply with information-sharing provisions under FCA rules.
In addition, the Regulations make consequential amendments to existing anti-money laundering and financial promotions requirements for cryptoasset firms to reflect the new regulatory perimeter.
Transitional measures will be available to firms that apply to the FCA for a licence ahead of the regime’s start date, enabling them (and certain affiliates) to continue providing services in the UK to a greater or lesser extent while their applications are being considered.
Parliamentary approval of the Regulations is expected in 2026, and the regime will then go live on October 25, 2027. The FCA is empowered to make rules ahead of the go-live date.
Accordingly, on December 16, 2025, the FCA also published three consultation papers setting out its proposed rules and guidance on regulating cryptoasset activities, the admissions and disclosures and market abuse regime for cryptoassets, and a prudential regime for cryptoasset firms.
The consultation on regulating cryptoasset activities sets out the FCA’s proposed rules and guidance for some of the new regulated cryptoasset activities introduced through the Regulations. These activities include: (i) operating a trading platform; (ii) intermediaries; (iii) lending and borrowing; (iv) staking; and (v) the approach for decentralised finance.
The consultation on admissions, disclosures and a market abuse regime for cryptoassets sets out the FCA’s proposals for two new regimes under the designated activities regime: (i) admissions and disclosures—governing public offers of qualifying cryptoassets and their admission to trading on cryptoasset trading platforms, and disclosure obligations relating to admissions to trading and the issuance of UK-issued qualifying stablecoins; and (ii) a market abuse regime for cryptoassets—introducing requirements to prevent, detect and disrupt market abuse in cryptoasset markets.
The consultation on a prudential regime for cryptoasset firms sets out the FCA’s proposed prudential requirements for cryptoasset firms, building on earlier proposals published in May 2025. Please also see the Prudential regulation section for further information on the Prudential regimes for cryptoassets exposures, including the prudential requirements under the future UK regime.
The consultations close on February 12, 2026, and final rules and guidance are expected later in 2026.
For further information on the future UK crypto regime, please see our blog post “UK future crypto framework: The countdown begins” and our webinars here and here.
Stablecoins
The UK is advancing in its plans to regulate stablecoins. The FCA has said that stablecoin payments are a priority in 2026 and it is working closely with the Bank of England to develop the UK’s regulatory regime for stablecoins.
Under the UK’s future crypto framework, issuing “qualifying stablecoins” will become a regulated activity. Firms wishing to issue qualifying stablecoins will need to be authorised by the FCA under the Financial Services and Markets Act 2000 and will be subject to ongoing supervision (see the item above on the Future UK crypto regime).
The FCA consulted on its rules for stablecoin issuance and cryptoasset custody in May 2025. In the consultation paper, the FCA proposed rules and guidance for the issuance of qualifying stablecoins and the safeguarding of qualifying cryptoassets, including stablecoins—activities which will become new regulated activities under the UK’s future crypto regime.
The FCA set out proposals under which qualifying stablecoin issuers will be required to:
- Back qualifying stablecoins with secure, liquid assets in a statutory trust for qualifying stablecoin holders (held with a third-party custodian who is not in the issuer’s group so as to mitigate contagion risk);
- Offer redemption of qualifying stablecoins in exchange for money to all holders; and
- Clearly disclose their policy for redemption and the composition of backing assets to consumers.
The FCA also proposed that custodians of qualifying cryptoassets will be required to: (i) segregate client cryptoassets from their own; (ii) hold those qualifying cryptoassets on behalf of clients in a trust; (iii) have accurate books and records of clients’ cryptoassets holdings; and (iv) have adequate controls and governance to protect clients’ cryptoassets holdings. Final rules are expected to be published in 2026 before the future UK crypto regime go-live date on October 25, 2027.
To enable firms to experiment with the issuance of stablecoins, the FCA will open its regulatory sandbox for safe testing and to support innovative policy development. It is inviting firms that plan to issue a stablecoin in the UK and wish to test their products in its regulatory sandbox to apply by January 18, 2026.
The Bank of England is also currently consulting on its proposed regulatory framework for sterling-denominated systemic stablecoins. Under the framework, HM Treasury will determine which payment systems using stablecoins, and their service providers, should be recognised as systemically important. Once recognised, these entities will fall within the Bank of England’s remit and be subject to its powers under the Banking Act 2009, in addition to, where applicable, future licensing supervision by the FCA.
Key proposals include:
- Allowing issuers to hold up to 60% of backing assets in short-term sterling-denominated UK government debt, with the remaining 40% as unremunerated deposits at the Bank of England. Issuers deemed systemic at launch, or transitioning from the FCA’s non-systemic regime, may initially hold up to 95% in short-term UK government debt to support viability during growth;
- Using existing international standards as the baseline for capital requirements for general business risk of systemic stablecoin issuers, with capital to be held in the UK;
- Having central bank liquidity arrangements to support systemic stablecoin issuers during periods of stress; and
- Introducing temporary holding limits of GBP20,000 per stablecoin for individuals and GBP10mn for businesses, with an exemption regime for large corporates requiring higher holdings. The Bank of England expects that these limits will be removed once transition risks to real-economy financing are fully understood and mitigated or subside. Limits will not apply to stablecoins used for wholesale financial market settlement within the Bank of England and FCA’s Digital Securities Sandbox.
In H1 2026, the Bank of England is expected to publish a policy statement and a consultation on rules for systemic stablecoins. The Bank of England and the FCA are also due to publish a joint approach document that will clarify how the rules will apply in practice. The Bank of England will publish its final rules instrument and supervisory approach in H2 2026.
For further discussion on stablecoins, including on why they matter, how they’re being used today and what the future could look like, please listen to our podcast “Beyond the buzz: What is driving stablecoin adoption?”. Please also see our webinar “Navigating the global crypto regulatory landscape: UK, U.S. and EU alignment and divergence”.
Property (Digital Assets etc) Act 2025
The Property (Digital Assets etc) Act 2025 has come into force and gives effect to recommendations of the Law Commission confirming in statute that a thing that is digital or electronic in nature can be recognised as personal property even if it does not fall within the traditional categories of “things in possession” or “things in action”. This means that certain digital assets such as crypto-tokens or crypto currencies can now be recognised as property providing legal certainty for businesses and individuals.
Digital pound
With the belief that “public” money will become increasingly less useful and useable and of shrinking relevance to a large part of the population, HM Treasury and the Bank of England consulted on a UK retail central bank digital currency (CBDC) in February 2023. The “digital pound”, if introduced, would be issued by the Bank of England and could be used by households and businesses for everyday payments in-store and online. It would be interchangeable with cash and bank deposits. The consultation explored the need for a digital pound and proposed a set of design choices. The Bank of England and HM Treasury published their response in January 2024.
The first digital pound progress update was published in January 2025. The update summarises the work over the past year, including how it relates to the evolving payments landscape, such as the National Payments Vision. It also announced the Bank of England’s plans to launch the Digital Pound Lab, an experimental platform for industry to test use cases and understand potential business models for a digital pound. The Lab is expected to run until July 2026.
In October 2025, the Bank of England published an update on the ongoing design phase of the digital pound. While no decision has yet been made on its introduction, the focus over the past year has been on developing a detailed blueprint, supported by design notes and practical experimentation through the Digital Pound Lab. The blueprint is expected to be published in 2026. This work will inform a decision by the Bank of England and HM Treasury on next steps in 2026. In parallel, payment trends in the UK and internationally will continue to be monitored to support this assessment. If a decision is made to proceed, a digital pound would only be introduced following the passage of primary legislation by Parliament.
The Bank of England will continue targeted experiments and stakeholder engagement to explore what is viable and what may need to change.
EU
MiCAR
The European Commission’s Regulation on markets in cryptoassets (known as MiCAR or MiCA) has now had its first birthday. MiCAR established an EU legal framework for a broad range of cryptoassets that were not covered by existing EU financial services legislation, and introduced specific rules for stablecoins, which are divided into e-money tokens (EMTs) and asset-referenced tokens (ARTs). MiCAR has applied fully since December 30, 2024, subject to certain transitional measures, while the provisions related to issuers of ARTs and EMTs have applied since June 30, 2024.
MiCAR introduced requirements for cryptoasset issuers and cryptoasset service providers (CASPs) relating to transparency and disclosure for the issuance, offer to the public and admission to trading of cryptoassets. This includes an obligation on all issuers of cryptoassets that fall within the scope of MiCAR to publish a white paper, setting out mandatory disclosures. The white paper must be notified to competent authorities, who may require modifications (although there is no pre-approval requirement before publication). Additional disclosures are required for ARTs and EMTs.
MiCAR also introduced requirements for: (i) authorisation of CASPs and issuers of ARTs (unless they are already authorised under existing financial services legislation); (ii) supervision of CASPs, issuers of ARTs and issuers of EMTs, including powers for the European Supervisory Authorities to supervise certain “significant” issuers and CASPs; (iii) operation, organisation and governance of CASPs, issuers of ARTs and issuers of EMTs; (iv) consumer protection in the issuance, offer to the public and trading, exchange and custody of cryptoassets; (v) prevention of insider dealing, unlawful disclosure of inside information and market manipulation related to cryptoassets; and (vi) a change in control regime governing the acquisition of interests in CASPs.
MiCAR contains a substantial number of mandates for delegated acts, regulatory technical standards and implementing technical standards. Throughout 2025, the European Supervisory Authorities (namely ESMA and the EBA) continued finalising these level 2 measures, as well as level 3 measures. The Commission has been able to adopt the majority of the draft standards. Most are now in force. Others have been adopted but are still subject to scrutiny, and some are yet to be adopted. Once the remaining standards are adopted and come into force during the course of 2026, the EU framework for cryptoassets will be complete. In 2026, we also expect to see the first annual report on the application of MiCAR and developments in markets in cryptoassets from the EBA and ESMA—the deadline for this was December 31, 2025.
Entities benefitting from the transitional measures under MiCAR, including grandfathering and simplified authorisation procedure, must acquire authorisation by July 1, 2026 to continue providing cryptoasset services. This is the date on which the transitional phase of MiCAR ends.
The EBA has also issued temporary guidance on the interaction between MiCAR’s stablecoin rules and the revised Payment Services Directive (PSD2), including to the effect that CASPs will also require payment services licensing for certain of their activities. The EU co-legislators hope to make use of the ongoing legislative process of PSD3 and the PSR to amend and strengthen MiCAR in this area. Please refer to the item on the EU payments package under the Payment services and payment systems section for further information on the PSD3 and the PSR.
Looking ahead, the market integration package published by the Commission in December 2025 proposes centralised supervision for CASPs by ESMA, to ensure a consistent application of MiCAR requirements and enhance supervisory and investigative powers. For further information on the market integration package please see the Financial markets section. The Commission is likely to consult on changes to MiCAR in early 2026 as part of its delayed review, with a full report due to be presented on the application and impact of MiCAR by mid-2027.
Please see the Prudential regulation section for further information on the Prudential regimes for cryptoassets exposures, including the prudential requirements under MiCAR.
For more information on MiCAR, please see our bulletins “MiCAR under the microscope—Part 1: MiCAR is law”, “MiCAR under the microscope—Part 2: Are you in or out of scope?”, “MiCAR under the microscope—Part 3: The issuance of stablecoins under MiCAR: Scope and requirements”, “MiCAR under the microscope—Part 4: The CASP licensing regime”, “MiCAR under the microscope—Part 5: Regulatory requirements applicable to CASPs”, and “MiCAR under the microscope—Part 6: Acquisition of qualifying holdings of CASPs and ART issuers”, “MiCAR under the microscope—Part 7: Prudential and capital requirements for issuers of ARTs and CASPs” and “MiCAR under the microscope—Part 8: White paper vs. prospectus”.
Digital Euro
The digital euro project is the European Central Bank’s (ECB) response to the changing landscape of consumer payments, driven by the rise of cryptocurrency, payment fintechs and electronic transactions. A digital euro would be a new form of digital money, issued and supervised by the ECB as a CBDC. To advance the development and implementation of this project, on June 28, 2023, the European Commission presented the digital euro package. This legislative package includes a Regulation establishing the legal framework for a possible digital euro. The digital euro would be a supplement to euro cash. It would take the form of a universal means of payment across the euro area, which would hold legal tender status (as euro cash) and be widely accepted as a means of payment.
The digital euro project has now completed its two-year preparation phase, which laid the groundwork for the potential issuance of a digital euro. During this stage, the digital euro rulebook was developed, and providers have been selected that could develop a digital euro platform and infrastructure. The ECB will now move on to the next phase of the digital euro project of building and testing technical systems. The ECB’s final decision on whether to issue a digital euro, and on what date, will only be taken once the legislation has been adopted. Under the assumption that European co-legislators will adopt the Regulation on the establishment of the digital euro in the course of 2026, a pilot exercise and initial transactions could take place as early as mid-2027, and the digital euro could be issued for the first time during 2029.
For further information on digital assets specifically relating to financial instruments, please see the Digital assets subsection within the Financial markets section.
