FCA Tightens the Lines Around Crypto as UK Oversight Enters a Mature Phase

Key Takeaways

• Regulatory Perimeter Clarified: The FCA categorizes cryptoassets into security tokens, e-money tokens, and unregulated tokens, with security and e-money tokens falling inside the regulatory perimeter.
• AML Supervision in Force: Since January 2020, the FCA has acted as the AML and CTF supervisor for certain cryptoasset firms under the Money Laundering Regulations.
• Financial Promotions Regime Applies: From 8 October 2023, qualifying cryptoassets were brought within the UK financial promotions framework, applying to firms marketing to UK consumers regardless of location.
• Four Legal Promotion Routes: Crypto promotions must be communicated or approved by authorized firms, rely on a specific registered exemption, or comply with an applicable Financial Promotion Order exemption.
• Retail Derivatives Restricted: The FCA continues to prohibit the sale of derivatives and exchange-traded notes referencing cryptoassets to retail consumers due to valuation and risk concerns.

Deep Dive

The Financial Conduct Authority has updated its public overview of how it regulates cryptoassets, setting out in clearer terms which digital assets fall inside its remit, how crypto firms are supervised for anti-money laundering purposes, and the rules governing how crypto is marketed to UK consumers.

The update, last revised on 13 February 2026, does not introduce new policy measures. Instead, it consolidates the UK’s approach at a time when crypto oversight has moved from exploratory guidance to an established supervisory regime.

Drawing the Regulatory Boundary

At the core of the FCA’s framework is classification.

The regulator defines cryptoassets as cryptographically secured digital representations of value or contractual rights that use distributed ledger technology and can be transferred, stored, or traded electronically.

Whether an asset falls within regulation depends on its structure and function.

Security tokens, those that amount to a “Specified Investment” under the Regulated Activities Order, are generally within the FCA’s perimeter. These may provide rights such as ownership, repayment of a sum of money, or a share in future profits. Some may also qualify as transferable securities or other financial instruments under MiFID II.

E-money tokens that meet the definition under the Electronic Money Regulations are also regulated.

By contrast, tokens that do not meet those definitions are considered unregulated. This includes utility tokens, which provide access to a product or service, and exchange tokens such as Bitcoin and Litecoin. These are typically decentralized and used primarily as a medium of exchange or for investment purposes, but do not confer the kinds of rights associated with securities or e-money.

The distinction determines whether firms must be authorized by the FCA to carry on relevant activities.

AML Supervision Since 2020

The FCA’s involvement in the crypto sector expanded in January 2020, when it became the UK’s anti-money laundering and counter-terrorist financing supervisor for firms carrying on certain cryptoasset activities.

Under this regime, in-scope businesses must comply with requirements under the Money Laundering Regulations. The framework is designed to ensure that firms can identify and prevent money laundering through crypto channels.

This supervisory role marked a significant development in the UK’s approach, moving beyond definitional guidance toward ongoing compliance oversight.

Crypto Promotions Now Within Scope

A further shift came in October 2023, when qualifying cryptoassets were brought within the UK’s financial promotions regime.

Following final rules published in PS23/6 and finalized guidance in FG23-3 in November 2023, firms marketing qualifying cryptoassets to UK consumers must now comply with strict promotional requirements.

The rules apply regardless of whether the firm is based in the UK or overseas.

There are four lawful routes for promoting cryptoassets to UK consumers:

• The promotion is communicated by an authorized person
• The promotion is approved by an authorized person
• The promotion is communicated by or on behalf of a cryptoasset business registered with the FCA under the Money Laundering Regulations, relying on the Article 73ZA exemption
• The promotion otherwise complies with an exemption in the Financial Promotion Order

The regime is intended to ensure that crypto marketing is fair, clear, and not misleading.

Retail Derivatives Ban Remains in Place

Even where certain cryptoassets fall outside the FCA’s regulatory perimeter, products referencing them may not.

The regulator has previously stated that derivatives contracts and exchange-traded notes linked to cryptoassets are likely to be within scope. Due to concerns about retail consumers’ ability to value and assess the risks of such products, the FCA has prohibited the sale of derivatives and exchange-traded notes referencing cryptoassets to retail consumers.

The restriction reflects ongoing concerns about volatility, valuation challenges, and potential consumer harm.

Built on a 2018 Taskforce Assessment

he UK’s regulatory approach to cryptoassets was initially shaped by the 2018 Cryptoasset Taskforce, which brought together HM Treasury, the Bank of England, and the Financial Conduct Authority.

In its 2018 report, the Taskforce concluded that distributed ledger technology had the potential to deliver benefits in financial services and beyond. However, it also identified risks, including financial crime, consumer losses, threats to market integrity, and potential implications for financial stability if the market were to expand significantly.

The FCA’s updated overview reflects how those early risk assessments have translated into a structured oversight model.

For firms operating in the UK crypto market, the framework now spans perimeter guidance, AML supervision, marketing controls, and restrictions on higher-risk retail products. The regulator’s position remains consistent: innovation may continue, but it must operate within established standards for consumer protection and market conduct.

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