The UK’s financial regulator has softened several key elements of its landmark cryptocurrency framework after industry groups warned that the original proposals were too burdensome and risked undermining Britain’s ambitions to become a global digital assets hub.
The Financial Conduct Authority (FCA) announced revisions to its long-awaited crypto rules, reducing capital and disclosure requirements for certain firms while maintaining broad oversight of the rapidly growing sector. The new framework is expected to take effect in October 2027 and will bring much of the UK’s crypto industry under formal regulation for the first time.
Among the most significant changes, the FCA cut the capital requirement for non-systemic stablecoin issuers from 2% to 1% of the total value of coins issued. The regulator also lowered the capital coverage requirement for crypto trading assets to 40% of net exposure, down from an initially proposed 100%. Smaller and lower-risk firms will also be exempt from certain public disclosure obligations.
The revisions follow months of lobbying by crypto companies, which argued that the original proposals would have placed the UK at a competitive disadvantage compared with the United States and the European Union, both of which have advanced more crypto-friendly regulatory frameworks in recent years.
Despite the softer approach, the FCA said the new rules are designed to improve consumer protection, strengthen market integrity and reduce risks associated with digital assets. Crypto firms will still be required to meet capital standards, conduct stress testing and implement stronger safeguards around custody and operational resilience.
The regulator is also expected to consult further on areas such as decentralized finance (DeFi), particularly where identifiable entities exercise control over protocols and services. Systemically important stablecoins will remain subject to stricter oversight by the Bank of England.
The policy shift highlights the increasingly delicate balancing act facing regulators worldwide. Authorities are seeking to encourage innovation and attract investment while ensuring that the growth of digital assets does not create new risks for consumers or the broader financial system.
Industry groups welcomed the FCA’s decision, saying a more proportionate framework could encourage investment and boost confidence in the UK’s digital asset market. Some estimates suggest clearer regulation could help bring millions of additional users into the crypto ecosystem over the coming years.
As competition intensifies between major financial centres to attract crypto businesses, the UK’s revised framework signals a more pragmatic approach—one that aims to support the industry’s growth without abandoning regulatory safeguards.
Reference: Financial Times, “UK regulator waters down landmark crypto rules” (2026). Financial Times article
