UK Moves to Regulate Crypto by 2027 After FCA Sought Public Feedback on Oversight

The UK is preparing to regulate the cryptocurrency sector
under the supervision of the Financial Conduct Authority. The government aims
to introduce consumer protections that are currently missing in the industry,
according to The Guardian. Officials said one goal of the legislation is to
close this protection gap.

The FCA launched a public
consultation to examine how existing handbook provisions would apply to crypto
firms. The consultation covers governance, operational resilience,
financial crime controls, and Consumer Duty obligations.

Companies would need
FCA authorization before operating. Officials said this is intended to raise
standards, strengthen consumer protection, and address risks, including
volatility, as new legislation is drafted.

David Geale, executive director for payments and digital
finance at the FCA, said the regulator is preparing new rules for the UK’s
crypto sector. He added that “regulation is coming – and we want to get it
right” and noted that the FCA had considered feedback from the public while
developing its proposals.

Rising Risks and Fraud

Crypto growth in the UK has coincided with rising fraud and
investment losses. UK Finance data showed a 55% increase in funds lost to
crypto-related scams over the past year. Last month, authorities carried out
the country’s largest Bitcoin seizure.

Chinese national Zhimin Qian, who
defrauded more than 128,000 people in China, had hidden the proceeds in the UK.
Authorities recovered 61,000 BTC, worth over £5 billion.

UK TO REGULATE CRYPTO UNDER FINANCIAL LAW FROM 2027- The UK will bring cryptocurrencies like Bitcoin under full financial regulation from 2027, placing crypto alongside traditional financial products, per Reuters.- The Treasury plans to extend existing financial laws to… pic.twitter.com/RhWK96NN51

— BSCN (@BSCNews) December 15, 2025

Goals of the New Rules

The rules are expected to increase market transparency,
improve detection of suspicious activity, allow sanctions, and hold companies
accountable. Officials said the measures could help position the UK as a hub
for digital asset innovation.

“By giving firms clear rules of the road, we are providing
the certainty they need to invest, innovate and create high-skilled jobs here
in the UK, while giving millions strong consumer protections, and locking dodgy
actors out of the UK market,” UK Chancellor Rachel Reeves said.

Support for “Growth”

City Minister Lucy Rigby said the legislation would support
growth. “Bringing forward this legislation is a milestone. Our intention is to
lead the world in digital asset adoption.

The rules we are putting in place are
going to be proportionate and fair. They are going to be good for growth,
encourage firms to invest here and protect consumers as well,” she said.

Rigby is expected to table secondary legislation. Officials
aim to have the final rulebook ready by mid-2026, with full implementation in
2027.

Faster Registration Process

The FCA has accelerated its registration process for crypto
firms, reducing the average approval time from over a year to five months.
Approval rates have increased to 45% in recent months, compared with less than
15% over the past five years.

This article was written by Tareq Sikder at www.financemagnates.com.



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