Crypto News: UK Plans to Bring Crypto Under Financial Services Law by 2027, Reports Say

The United Kingdom is preparing a major regulatory shift that would bring cryptocurrencies fully under existing financial services laws by October 2027, according to reports from The Guardian and Reuters.Lawmakers are expected to introduce new legislation to Parliament as early as Monday, marking one of the most significant steps yet in the UK’s effort to regulate digital assets and position itself as a global crypto hub.Crypto to Fall Under FCA OversightUnder the proposed bill, crypto firms would be regulated in line with traditional financial institutions and placed under the direct supervision of the Financial Conduct Authority (FCA). This would move crypto beyond its current regulatory status, which primarily focuses on anti-money laundering (AML) registration rather than full market oversight.UK Treasury head Rachel Reeves said the move is aimed at strengthening the country’s competitiveness while improving consumer protection.“Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world-leading financial center in the digital age,” Reeves said.“Clear rules of the road will give firms the certainty they need to invest, innovate and create high-skilled jobs, while locking dodgy actors out of the UK market.”Aligning Crypto With Traditional Finance RulesThe legislation would subject crypto exchanges, dealers and agents to the same regulatory standards as traditional financial products, such as stocks and other securities. That includes requirements around governance, consumer protections and market conduct.In April, the UK Treasury already released draft proposals to bring crypto firms into the regulatory perimeter. A Treasury spokesperson told Reuters that the latest version of the bill includes only minor changes from those earlier drafts.At present, crypto businesses operating in the UK must register with the FCA, but the regulator’s authority is largely limited to overseeing AML and counter-terrorism financing risks.UK, US Seek Regulatory AlignmentThe upcoming legislation would bring the UK closer in line with the United States, which is also advancing bills to define how crypto is overseen by its market regulators.In September, the UK and US formed a joint task force to explore short- to medium-term cooperation on crypto regulation, signaling growing international coordination on digital asset policy.Government Aims to “Lead the World” in Crypto AdoptionEconomic Secretary Lucy Rigby described the legislation as a turning point for the UK’s digital asset strategy.“Bringing forward this legislation is a milestone. Our intention is to lead the world in digital asset adoption,” Rigby told the Financial Times.“The rules will be proportionate and fair — good for growth, encouraging investment while protecting consumers.”Rigby added that while the framework is designed specifically for the UK, regulatory alignment with other markets could create mutually beneficial access for firms operating globally.Stablecoins and DeFi Still Under ReviewThe proposed law follows the FCA’s release of a crypto regulatory roadmap last month, which includes consultations on stablecoins, trading platforms and decentralized finance (DeFi). Final rules are expected to be completed by the end of 2026.Meanwhile, the Bank of England recently outlined its own approach to stablecoin regulation. That plan has drawn criticism from some lawmakers, who warned it could make the UK a “global outlier” by restricting wholesale stablecoin use and imposing strict holding caps.What Comes NextIf passed, the legislation would mark a decisive shift from light-touch oversight to full financial regulation of crypto in the UK, setting clearer expectations for firms while increasing scrutiny.With implementation targeted for October 2027, the coming two years will be critical as policymakers finalize rules, consult industry participants and define how crypto fits into the UK’s broader financial system.