UK to regulate crypto by 2027: What it means for global crypto and fintech firms

The UK’s decision marks the end of crypto’s regulatory grey zone.

At CoreStream GRC, we’re seeing global crypto and fintech teams move from asking if regulation will land, to working out how to prepare for it in a way that does not slow the business down. In this piece our team at CoreStream GRC breaks down what the UK’s decision really means and what firms should be thinking about next.

What was announced: UK Treasury to regulate Bitcoin and crypto by 2027

The UK Treasury has confirmed that crypto assets will be brought under a full financial services regulatory regime from October 2027, extending existing UK financial regulation to crypto firms operating in or servicing the UK market.

The legislation, expected to be introduced shortly, will place crypto firms firmly within the UK’s regulatory perimeter, with the Financial Conduct Authority (FCA) and the Bank of England responsible for developing the detailed rules. Both regulators have indicated they aim to finalize their frameworks by the end of 2026, giving firms a defined transition window.

UK chancellor Rachel Reeves described the move as providing “clear rules of the road,” strengthening consumer protection and keeping “dodgy actors” out of the market. [1]

She framed the reform as central to the UK’s ambition to remain a world-leading financial center in the digital age, offering firms the certainty needed to invest and scale while improving safeguards for consumers.

From industry, the response has been cautiously positive. Daniel Slutzkin, Head of UK at crypto exchange Gemini, said firms had “long awaited regulatory clarity” and could now begin preparing to meet the new requirements.[2]

While consumer protection and financial crime prevention are core policy drivers, the Treasury has been explicit that competitiveness also matters. The government has been clear that the objective is not to suppress crypto activity, but to anchor legitimate crypto and fintech businesses within a credible, supervised financial system.

What crypto regulation is in place in the UK now?

Today, crypto regulation in the UK is best described as partial and fragmented.

Crypto firms already fall within the regulatory perimeter in limited but significant ways:

• Firms providing certain crypto services must register with the FCA.
• Anti-money laundering and counter-terrorist financing controls apply.
• Financial crime compliance obligations are firmly established.

Beyond that, the framework is uneven. There is no single, end-to-end regulatory regime governing crypto activities.[3] Instead, oversight is spread across guidance, consultations, and interim supervisory expectations.

Key gaps remain:

• Market abuse rules are still being developed.
• Custody and safeguarding oversight lacks a fully defined regime.
• Issuance classifications remain uncertain.
• Trading supervision has largely progressed through consultation rather than binding rules.[4]

This interim model has allowed innovation to continue, but it has also created ambiguity for firms operating on a scale, particularly those managing cross-border products, complex trading structures or institutional clients.

Why does the UK’s announcement for future crypto regulation matters now?

Although the regime will not formally take effect until 2027, the direction of travel is now settled.

The UK has made a clear policy choice to treat crypto less as a regulatory exception and more as a financial activity. Rather than building a standalone crypto framework, it extends existing financial services regulations to cover crypto firms.

This choice aligns the UK more closely with the United States, where crypto regulation has largely been shaped through existing financial laws and supervisory powers. It stands in contrast to the European Union’s MiCA framework, which was designed as a purpose-built crypto regime.

For global crypto and fintech firms, this matters because regulatory expectations will crystallize long before 2027. Draft rules, consultations and supervisory signals will emerge through 2025 and 2026. Firms that wait for final legislation risk compressing complex remediation into an already narrow window.

The crypto regulatory roadmap for the UK: How this compares internationally

European Union

The EU has taken the most structured approach to date through the Markets in Crypto-Assets Regulation (MiCA).[5]

MiCA establishes a bespoke regulatory framework for crypto assets not already covered by existing financial services law. It introduces:

• Harmonized authorization requirements across EU member states
• Clear conduct standards
• Specific regimes for stablecoins and crypto asset service providers

The framework began applying in stages from 2024, giving firms a single rulebook but also imposing significant upfront compliance obligations.

United States

The US remains fragmented by comparison.

Crypto regulation has largely developed through:

• Enforcement actions
• Agency guidance
• Court decisions
• Targeted legislative initiatives, particularly around stable coins

There is no single, comprehensive federal statute governing crypto. Instead, firms navigate overlapping mandates from regulators such as the SEC, CFTC, and banking authorities. Academic analysis has repeatedly highlighted how this lack of classification clarity creates compliance uncertainty, particularly for global firms operating across jurisdictions.[6]

United Kingdom

The UK sits somewhere between these two models.

Rather than creating a parallel crypto regime, it is choosing to fold crypto into existing financial services regulation. For global firms, this means:

• Familiar regulatory architecture
• Standards that resemble traditional financial services expectations
• Less need to build entirely separate compliance frameworks for the UK.

At the same time, it removes much of the regulatory flexibility that characterized the UK’s earlier, lighter-touch phase.

Middle East

The Middle East has taken a more purpose-built approach to crypto regulation, particularly across parts of the Gulf, and is structurally closer to the EU model than to the UK or US.

Research[7] identifies jurisdictions such as the UAE as early movers in developing bespoke regulatory frameworks for crypto assets, rather than adapting legacy financial services law or relying primarily on enforcement.

These frameworks typically include:

• Dedicated regulatory regimes for crypto and virtual asset activities
• Clear classification of crypto asset service providers
• Formal licensing requirements for exchanges, custodians, and intermediaries
• Early emphasis on governance, AML, and market integrity

Like the EU’s MiCA regime, these frameworks define crypto activities and service providers explicitly, use formal licensing regimes for exchanges, custodians, and intermediaries, and set expectations upfront around governance, AML, and market integrity. This approach is clearly distinct from the US’s enforcement-led model and more bespoke than the UK’s decision to fold crypto into existing financial regulation.

Cambridge research [8] also notes that these regimes are not light-touch. Licensing requirements are detailed, supervisory engagement is ongoing, and firms are expected to demonstrate operational substance and compliance readiness from the outset.

The upside of Crypto compliance regulation in the UK

1. Regulation reduces uncertainty, which enables scale

Crypto has spent much of its history operating in regulatory grey areas. That ambiguity makes it hard for firms to scale with confidence.

Clear governance expectations, defined supervisory oversight, and consistent standards reduce uncertainty around:

• what activities are permitted,
• how they should be governed,
• and what regulators expect in practice.

For large, global crypto and fintech firms, this kind of certainty is not a constraint. It is often a precondition for sustainable growth, particularly when operating across multiple markets.

After all, the OCEG definition of GRC is a system that integrates governance, risk management, and compliance to enable organizations to achieve objectives, manage uncertainty, and act with integrity.

2. Clear rules unlock institutional participation

Institutional players tend to avoid markets where regulatory expectations are unclear or inconsistently enforced.

When regulation is transparent and enforceable:

• banks, asset managers, and pension funds are more willing to engage,
• corporate clients are more comfortable using crypto-based services,
• counterparties face less reputational and legal risk.

This typically leads to deeper liquidity, more stable market structures, and a shift away from purely speculative participation toward longer-term use cases as you’re addressing uncertainty.

3. Regulation improves trust by targeting known failure points

Consumer and investor trust has been one of the biggest barriers to mainstream crypto adoption.

Academic and policy research consistently points to the same issues:

• fraud and scams,
• weak custody and safeguarding arrangements,
• poor or inconsistent disclosures.

Regulation that directly targets these risks can raise confidence and trust without shutting down legitimate activity. For well-run firms, stronger standards can actually help differentiate credible operators from weaker or opportunistic ones not acting with integrity.

4. Regulation does not automatically drive activity offshore

One of the crypto sector’s most common arguments is that regulation causes capital flight.

Empirical evidence does not strongly support this claim.

A large-scale study by Feinstein and Werbach[9] examining global cryptocurrency markets found almost no systemic evidence that regulatory announcements lead to sustained capital flight. Across different jurisdictions and regulatory models, trading activity was often largely unaffected.

Their conclusion is important: uncertainty is more destabilizing than regulation itself. Well-designed rules can stabilize markets by clarifying expectations rather than suppressing activity.

5. Regulatory clarity can be a competitive advantage

For global firms making strategic decisions about where to invest and expand, regulatory clarity matters.

Jurisdictions that offer:

• clear rules,
• credible supervision,
• and predictable enforcement

are more attractive to serious, long-term crypto businesses than those relying on ambiguity or light-touch oversight.

In that sense, regulation is not just a compliance issue. It is part of the competitive positioning of a financial center, and part of how global firms decide where to build for the long term.

The challenges to consider with Crypto compliance regulation in the UK

1. Regulation shifts compliance from a one-time hurdle to a permanent operating cost

Early crypto regulations often focused on registration. Once registered, firms could largely operate without continuous oversight.

Full financial services-style regulation changes that model completely.

• Supervision becomes ongoing, not episodic.
• Regulators expect regular engagement, updates, and evidence.
• Compliance becomes a continuous process rather than a project.

For leadership teams, this means compliance costs are no longer temporary or front-loaded. They become a fixed feature of the operating model.

2. Senior accountability increases, not just policy requirements

As firms move into financial services-style regulation, accountability shifts upward.

• Greater personal responsibility for senior managers
• Clear expectations around ownership of risk and controls
• Less tolerance for informal or undocumented decision-making

This is not just about having policies in place. Regulators will expect to see who owns decisions, how risks are escalated, and how issues are resolved in practice. A purpose-built tech system might then be needed to stay on top of this and maintain a clear version/audit trail.

Want to see how CoreStream GRC could help with this?

3. Fast-growth operating models come under pressure

Many crypto firms scaled quickly in an environment where speed mattered more than structure.

That can become a liability under supervision.

• Controls that evolved organically may not meet regulatory standards
• Processes that rely on informal coordination may need formal approval flows.
• Growth-driven workarounds can fail under audit or inspection.

The result is often retrofitting governance onto an existing business, which is more complex and expensive than building it in from the start.

It might then be worth speaking to a compliance and risk expert to help audit what you already have and build a program that makes sense today and for the future.

4. Systems and data limitations become visible

Regulation exposes weaknesses in systems that were “good enough” before.

• Audit trails must be complete, accessible, and reliable.
• Reporting needs to be consistent across products and regions.
• Data quality and control mapping become critical.

Legacy systems, manual tracking, or disconnected tools often struggle to meet these expectations, creating pressure to invest in remediation while continuing to operate at scale.

5. Global firms face duplication due to regulatory divergence

For global crypto and fintech firms, the biggest cost driver is often inconsistent across jurisdictions, not regulation itself.

Research from the Cambridge Centre for Alternative Finance[10] highlights how:

• The same crypto activity may be classified differently by regulators.
• Obligations overlap but are not identical.
• Controls must be duplicated to satisfy local interpretations.

This fragments compliance efforts and increases cost without necessarily improving risk outcomes.

6. The real risk is uncoordinated regulation, not regulation itself

The most material downside for global firms is not stricter rules, but uncoordinated rules.

When similar activities are regulated differently across markets:

• Product design becomes more complex.
• Operational decisions are constrained by geography.
• Compliance teams spend time reconciling differences rather than improving controls.

For leadership teams, this turns regulation into a strategic issue, not just a legal one. How regulation is implemented across regions can materially affect scalability, cost base, and speed to market.

A closing message from CoreStream GRC

For crypto and fintech firms, the challenge now is not waiting for the final rulebook. It is building an operating model that can stand up to supervision without becoming rigid or over-engineered. The firms that get this right will not just meet regulatory expectations. They will be in a stronger position to scale across markets.

At CoreStream GRC, we work with teams navigating exactly this shift, from early regulatory readiness to full financial services-style compliance. If you want to sanity-check your approach, pressure-test your governance model, or understand what “good” looks like ahead of 2027, our team is always happy to talk.

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FAQ on upcoming UK crypto regulation

Sources

[1] As reported on by Reuters; UK regulation of crypto assets to start in October 2027, finance ministry says | Reuters (last visited: Dec 2025)

[2]  As reported on by Reuters; UK regulation of crypto assets to start in October 2027, finance ministry says | Reuters (last visited: Dec 2025)

[3] Hufnagel and King, Regulating Crypto (2022) Law and Financial Markets Review, 16(3), pp. 177–180. Available at: https://doi.org/10.1080/17521440.2024.2320925 (last visited: Dec 2025)

[4] University of Cambridge, Judge Business School (n.d.) 2nd Global Cryptoasset Regulatory Landscape Study: Emerging practices and early lessons learned. Cambridge: Centre for Alternative Finance. See ; 2nd Global Cryptoasset Regulatory Landscape Study – CCAF publications – Cambridge Judge Business School (last visited: Dec 2025)

[5] University of Cambridge, Judge Business School (n.d.) 2nd Global Cryptoasset Regulatory Landscape Study: Emerging practices and early lessons learned. Cambridge: Centre for Alternative Finance. See ; 2nd Global Cryptoasset Regulatory Landscape Study – CCAF publications – Cambridge Judge Business School (last visited: Dec 2025)

[6] Hufnagel and King, Regulating Crypto (2022) Law and Financial Markets Review, 16(3), pp. 177–180. Available at: https://doi.org/10.1080/17521440.2024.2320925 (last visited: Dec 2025)

[7] University of Cambridge, Judge Business School (n.d.) 2nd Global Cryptoasset Regulatory Landscape Study: Emerging practices and early lessons learned. Cambridge: Centre for Alternative Finance. See ; 2nd Global Cryptoasset Regulatory Landscape Study – CCAF publications – Cambridge Judge Business School (last visited: Dec 2025)

[8] University of Cambridge, Judge Business School (n.d.) 2nd Global Cryptoasset Regulatory Landscape Study: Emerging practices and early lessons learned. Cambridge: Centre for Alternative Finance. See ; 2nd Global Cryptoasset Regulatory Landscape Study – CCAF publications – Cambridge Judge Business School (last visited: Dec 2025)

[9] Feinstein, B.D. and Werbach, K. (2021) ‘The impact of cryptocurrency regulation on trading markets’, Journal of Financial Regulation, 7, pp. 48–99. Available at: https://doi.org/10.1093/jfr/fjab003 (last visited: Dec 2025)

[10] University of Cambridge, Judge Business School (n.d.) 2nd Global Cryptoasset Regulatory Landscape Study: Emerging practices and early lessons learned. Cambridge: Centre for Alternative Finance. See ; 2nd Global Cryptoasset Regulatory Landscape Study – CCAF publications – Cambridge Judge Business School (last visited: Dec 2025)