UK Crypto Regulation in 2026: FCA Rules Explained
UK crypto regulation explained: FCA registration and promotion rules today, the authorisation regime from 25 October 2027, HMRC tax on DeFi, and self-custody.
UK crypto regulation in October 2026 has two layers: FCA registration and marketing rules that apply today, and a full FCA authorisation regime that starts on 25 October 2027. Buying, holding and selling crypto is legal in the UK. Parliament approved the new law on 4 February 2026, the FCA published its final rulebook on 30 June 2026, and existing firms have until 28 February 2027 to apply for authorisation if they want to keep operating while the FCA decides.
This guide covers what the FCA does now, what changes in 2027, how HMRC taxes crypto and DeFi, and where self-custody fits. For the global picture, see our crypto regulation by country hub.
Is crypto legal in the UK?
Yes. No UK law bans owning crypto, and the Property (Digital Assets etc) Act 2025 received Royal Assent on 2 December 2025. It confirms that digital assets such as crypto tokens can be personal property, which matters when courts deal with theft, insolvency or inheritance.
What the UK regulates is the businesses around crypto. The FCA has supervised crypto firms for anti-money laundering purposes since 10 January 2020, and any firm offering exchange or custody services in the UK must be registered with it under the Money Laundering Regulations. Some products stay off-limits to retail investors. The ban on retail sales of crypto derivatives remains in place, while crypto exchange traded notes (ETNs) have been open to retail since 8 October 2025, provided they are listed on a UK recognised investment exchange. The FCA notes that the Financial Services Compensation Scheme does not cover these ETNs.
How the FCA regulates crypto today
Until October 2027, three sets of rules do most of the work.
AML registration. Exchanges and custodian wallet providers need FCA registration, run customer due diligence and report suspicious activity. Since 1 September 2023 they have also applied the UK travel rule, which means collecting and sharing sender and recipient details on crypto transfers. Our travel rule guide explains the mechanics.
Financial promotions. Since 8 October 2023, anyone marketing crypto to UK consumers must follow the FCA's promotion rules. Ads must be clear, fair and not misleading and carry prominent risk warnings. First-time customers get a 24-hour cooling-off period and an appropriateness test before they can invest, and "refer a friend" bonuses are banned. The FCA has warned that promoting crypto unlawfully can be a criminal offence carrying up to two years in prison.
Enforcement against overseas firms. The rules reach firms based abroad that target UK users. The FCA sued the exchange HTX (formerly Huobi) on 21 October 2025 over its promotions. On 27 October 2026 the High Court recorded undertakings that HTX will not target UK consumers, and the FCA said on 29 October 2026 that HTX has left the UK and new UK users can no longer sign up.
The new regime from 25 October 2027
The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 move crypto into the same authorisation system that covers banks and brokers. From 25 October 2027, firms need FCA permission to carry out a set of new regulated activities: issuing qualifying stablecoins in the UK, safeguarding crypto for customers, operating a crypto trading platform, dealing, arranging deals, and arranging crypto staking.
The FCA's final rules came in five policy statements, PS26/9 to PS26/13, published on 30 June 2026. They cover admissions and disclosures for tokens, a market abuse regime, stablecoin issuance, conduct rules for exchanges, lenders and staking providers, and capital requirements. A sixth statement, PS26/18 on 16 September 2026, finalised the guidance on who falls inside the perimeter.
Three details matter most for ordinary users:
- Existing FCA registrations do not convert automatically. A firm that applies by 28 February 2027 can keep serving customers until the FCA decides on its application. A firm that does not apply will have to stop regulated activity when the regime starts.
- Crypto lending and borrowing will be open to retail customers through authorised firms, with disclosures, consent, appropriateness tests, over-collateralisation and negative balance protection.
- Staking through an authorised firm comes with disclosures, contractual terms and client consent. Firms may auto-stake your holdings if you consent, with an annual notice, and the rules set record-keeping for liquid staking.
| Date | What happened |
|---|---|
| 10 Jan 2020 | FCA becomes AML supervisor for crypto firms; registration required |
| 1 Sep 2023 | UK travel rule applies to crypto transfers |
| 8 Oct 2023 | Crypto financial promotion rules start (risk warnings, 24-hour cooling-off) |
| 31 Jan 2025 | Order confirming qualifying staking is not a collective investment scheme takes effect |
| 8 Oct 2025 | Retail access to crypto ETNs allowed |
| 4 Feb 2026 | Parliament approves the Cryptoassets Regulations |
| 30 Jun 2026 | FCA publishes final rules (PS26/9 to PS26/13) |
| 30 Sep 2026 | Authorisation application window scheduled to open |
| 21 Oct 2026 | FCA consults on DeFi perimeter guidance (CP26/36, GC26/7) |
| 28 Feb 2027 | Application window closes for firms relying on transitional protection |
| 6 Apr 2027 | Planned start of "no gain, no loss" tax treatment for crypto loans and liquidity pools |
| 25 Oct 2027 | New regime goes live; authorisation required |
Overseas firms that want to serve UK retail customers will generally need a UK legal entity rather than a branch, according to KPMG's summary of the final rules. The EU took a different route with MiCA and passporting, which our MiCA explainer covers.
Stablecoins: the FCA and the Bank of England
The UK splits stablecoin oversight in two. The FCA's PS26/10 sets rules for anyone issuing a qualifying stablecoin in the UK: backing assets held on a statutory trust, redemption at par, and a small buffer of up to 5% in excess backing. KYC checks have to be done before a redemption request is processed.
Sterling stablecoins that become widely used for payments will also fall under the Bank of England. Its policy statement of 22 June 2026 dropped the per-person holding limits it had proposed earlier in favour of a temporary cap on how much each systemic stablecoin can issue in total. The Bank plans to finalise its code of practice by the end of 2026. Our stablecoin regulation guide compares the UK with the US, EU and Asia.
How the FCA treats DeFi and staking
The final rules say they apply to DeFi "where there is an identifiable controlling entity". On 21 October 2026 the FCA opened two consultations that close on 18 November 2026. CP26/36 proposes perimeter guidance stating that using smart contracts or decentralised governance does not by itself decide whether someone is carrying on a regulated activity, and that calling a service "DeFi" does not change the analysis. GC26/7 explains how existing operational resilience and financial crime rules apply to authorised firms that use DeFi. The FCA expects to publish final guidance in early 2027.
A third paper, CP26/38 on the Financial Crime Guide (comments by 24 December 2026), lists enhanced due diligence on transactions involving unhosted wallets as an example of good practice for crypto firms. If you move coins between an exchange and your own wallet, our unhosted wallet guide explains what firms ask for.
Staking itself got an early fix. An order made in January 2025 confirmed from 31 January 2025 that qualifying crypto staking is not a collective investment scheme, which had been a legal grey area for staking providers. From October 2027, arranging staking for others becomes a regulated activity. More on how other countries handle it in is crypto staking legal?
How HMRC taxes crypto and DeFi
HMRC treats most personal crypto holdings as assets for Capital Gains Tax. Selling for pounds, swapping one token for another and spending crypto are all disposals, according to HMRC's Cryptoassets Manual. Moving tokens between wallets you own is not. For 2026 to 2027 the annual exempt amount is £3,000, and gains above it are taxed at 18% or 24% depending on your income. Staking rewards that are not part of a trade are taxed as income at their sterling value when you receive them.
DeFi rules are changing. On 13 July 2026 HMRC published draft legislation that would treat depositing tokens into qualifying lending arrangements and automated market maker liquidity pools as "no gain, no loss", so tax is deferred until there is an economic disposal. It applies to individuals and trustees from 6 April 2027 and is due in Finance Bill 2026-27. A separate draft gives eligible stablecoins a full CGT exemption for individuals from April 2027. Both are drafts and can change.
HMRC will also see more data. Under the Cryptoasset Reporting Framework, UK crypto service providers have collected user and transaction details since 1 January 2026, covering UK residents as well as foreign users, with the first reports due by 31 May 2027. Read our CARF guide and DeFi taxes explained for how swaps, LP positions and staking rewards are usually treated.
What this means for DeFi users in the UK
Holding your own keys and using a DeFi protocol from a self-custody wallet is legal in the UK. The FCA regime targets firms that hold customer assets or arrange deals, and much of what a non-custodial protocol does happens on-chain without anyone taking custody of your tokens. That gives UK users a practical alternative to a centralised exchange: no account that can be frozen, no sign-up, markets open around the clock, and rules you can read on-chain.
The alternative has hard limits, and they deserve the same weight:
- Pounds still enter and leave crypto through regulated exchanges and payment firms, which verify your identity. Regulated firms run these checks through identity verification providers such as iDenfy.
- HMRC taxes DeFi gains and income the same way whether or not a platform reports them, and CARF data will make exchange withdrawals to DeFi easier to trace.
- UK sanctions law, enforced by OFSI, applies to you personally in any wallet.
- Neither the Financial Services Compensation Scheme nor the Financial Ombudsman Service covers smart contracts. A bug, a stablecoin depeg or a liquidation is your loss.
- Some front-ends restrict UK users or add extra warnings because of the promotion rules, and the FCA's DeFi guidance may change which services need authorisation.
JewelSwap is a non-custodial protocol on MultiversX, Sui and Radix. You connect your own wallet; there is no account or sign-up. It offers liquid staking tokens (JWLSUI and SJWLSUI, JWLEGLD and SJWLEGLD, JWLXRD and SJWLXRD), auto-compounded yield farms on Scallop for Sui and on AshSwap, xExchange, OneDex and Hatom for MultiversX, and NFT lending on MultiversX. UK tax rules apply to those positions like any other DeFi activity, and the FCA's DeFi guidance is still in consultation. The self-custody guide covers wallet basics, and DeFi regulation explained compares the UK approach with the EU and US.
Frequently asked questions
Is crypto legal in the UK?
Yes. Owning, buying and selling crypto is legal, and the Property (Digital Assets etc) Act 2025 confirms crypto can be personal property. Firms offering crypto services must be registered with the FCA, and from 25 October 2027 they will need full FCA authorisation.
When does the FCA's new crypto regime start?
On 25 October 2027. The FCA published final rules on 30 June 2026, and existing firms that apply by 28 February 2027 can keep operating while their applications are decided.
Is staking regulated in the UK?
The new regulated activity is arranging staking for other people, so from October 2027 firms that do this for customers need FCA authorisation and must follow rules on disclosure, consent and record-keeping. HMRC taxes staking rewards as income when received, unless the activity is a trade.
Does the FCA regulate DeFi?
The FCA's rules apply to DeFi where there is an identifiable controlling entity. Its October 2026 consultation says the use of smart contracts does not by itself settle whether a service needs authorisation. Final DeFi guidance is expected in early 2027.
Do I pay tax on DeFi in the UK?
Yes. Swaps are disposals for Capital Gains Tax, staking rewards are usually income, and other DeFi returns can be income or capital depending on the arrangement. Draft legislation would defer tax on deposits into qualifying lending and liquidity pool arrangements from 6 April 2027, but it is not law yet.
Educational only, not legal, tax or financial advice. UK rules checked October 2026 and change often; check the FCA and HMRC or ask a qualified adviser before acting.
