FCA refines crypto perimeter ahead of authorisation

What does this mean?

The FCA is broadly proceeding with the rules as consulted on, with targeted clarifications to the final guidance. These include:

• UK scope: The FCA has expanded its guidance on the cryptoasset-specific “by way of business” test and when activities are carried on “in the UK”, including circumstances where services are provided to UK consumers by persons based outside the UK.

• Cryptoasset classification: The FCA has provided further guidance on the distinction between qualifying cryptoassets and specified investment cryptoassets, including cryptoassets that are solely records of rights or value and hybrid token structures.

• Stablecoins: The FCA has clarified that products using hybrid stabilisation mechanisms are not qualifying stablecoins and that wrapped tokens relating to stablecoins are not automatically qualifying stablecoins. It will consult further on the distinction between e-money and qualifying stablecoins.

• New exclusions: The Government’s amendments introduce several exclusions from the new regulated activities. These include proprietary trading and market making on a qualifying cryptoasset trading platform (QCATP) from dealing as principal, certain technical services from arranging deals, and certain safeguarding arrangements involving recognised UK or third-country central securities depositories. For UK qualifying stablecoins, they exclude certain activities relating to transfers and exchanges from dealing and arranging, temporary holdings for payment transactions and backing asset arrangements from safeguarding. They also introduce an exclusion for title transfer collateral arrangements involving qualifying stablecoins, except where the original holder is a consumer. Some exclusions are subject to specific conditions.

• Safeguarding: There is no express exclusion from the safeguarding activity for technology providers. Persons involved in delivering cryptoasset safeguarding solutions need to consider whether they have the requisite degree of control. The FCA has also expanded its guidance on safeguarding arrangements involving more than one party and on arranging safeguarding.

• Trading platforms: The FCA has amended its guidance on the scope of a QCATP) to align with the statutory definition and provided further guidance on the characteristics of a trading system. It also confirms that operating a QCATP is not an activity within the Digital Securities Sandbox.

• Dealing and arranging: The FCA has expanded its guidance on services that “add value” to an arrangement and clarified that this concept should not be applied in isolation. It has also provided further guidance on activities unlikely, in themselves, to amount to arranging, including information-only services.

• Staking: Providing information or analytics alone, without further involvement in the staking of qualifying cryptoassets, is unlikely to amount to arranging qualifying cryptoasset staking. The FCA has also amended its guidance on the technical services exclusion to align more closely with the legislation.

• Lending and borrowing: Cryptoasset lending and borrowing are not standalone regulated cryptoasset activities. Whether a person requires authorisation depends on whether it carries on dealing, arranging and/or safeguarding activities. The FCA has also clarified the distinction between cryptoasset lending and borrowing arrangements and regulated credit activities.

• MLRs: The FCA is proceeding with its guidance on the interaction between FSMA and the Money Laundering Regulations (MLRs). Firms will need to consider both regimes based on their business models and activities. Persons within scope of the new regime will also need to comply with the FCA’s financial crime rules.

The FCA has also clarified that advising on qualifying cryptoassets and managing qualifying cryptoassets are not new regulated cryptoasset activities introduced by the Cryptoasset Regulations.

What do firms need to do?

The final guidance gives firms more to work with on where technology provision ends and regulated activity begins, but it does not create a general technology exemption. In safeguarding, firms involved in delivering solutions still need to determine whether they have the requisite degree of control. For arranging, the FCA has provided more clarity on activities unlikely, in themselves, to amount to arranging. Firms should use these distinctions to make firm decisions on which activities and entities require permission, particularly where services are split across several providers.

The Government’s new exclusions warrant a fresh look at permissions for affected business models. This is particularly relevant for firms using UK qualifying stablecoins for payments, transfers, settlement or backing arrangements, but also for proprietary trading, market making, technical services and certain custody models. Firms should identify exactly which activities meet the conditions for an exclusion rather than treating them as broad exemptions for particular types of firm.

Overseas firms should also revisit how they serve the UK. The FCA has expanded its guidance on when activities are carried on “in the UK”, including circumstances involving services provided to UK consumers from overseas. Group structures, booking arrangements or an overseas legal entity should therefore be tested against the substance of where and how each regulated activity is carried on.

With the authorisation window opening on 30 September 2026, unresolved perimeter questions should now be taken through firms’ governance and, where necessary, raised with the FCA through its pre-application support service.

Next steps

The final PERG guidance does not yet incorporate the Government’s subsequent amendments. The FCA plans to consult on corresponding PERG amendments in early Q4 2026 and aims to publish final amended guidance in early 2027. The authorisation application window opens on 30 September 2026.