The U.K. Financial Conduct Authority’s (FCA) crypto regime has been widely praised for prioritizing access to global liquidity and supporting institutional adoption, although its licensing process is expected to be rigorous.
Released this week, the framework has been welcomed for its internationally oriented design. However, industry participants caution that unresolved issues could hinder the U.K.’s ambition to become a leading global crypto center.
The rules aim to preserve connectivity to global markets by allowing firms to tap offshore trading venues, while also enabling the use of stablecoins issued outside the U.K., according to industry feedback.
Katie Harries, Coinbase’s head of policy for Europe, described the framework as a major step forward, saying it enhances regulatory clarity and strengthens the U.K.’s competitiveness in digital asset innovation.
The FCA’s approach marks a clear departure from the European Union’s Markets in Crypto-Assets (MiCA) regime, which many industry players view as more restrictive for effectively encouraging firms to ring-fence liquidity and operations within Europe.
A central feature of the framework is the proposed Qualifying Cryptoasset Trading Platform (QCATP) model. Christopher Collins, a partner at Katten Muchin Rosenman, said the model would allow overseas exchanges to serve U.K. clients through locally authorized branches that remain integrated with global trading systems.
According to Collins, this structure would give U.K. investors access to deeper international liquidity pools instead of fragmented domestic markets, potentially improving pricing efficiency and execution quality.
Despite these benefits, Collins warned that a key uncertainty remains. While the FCA has stated that overseas firms will only be approved if their home jurisdictions provide “comparable regulatory protection,” it has not yet clarified which jurisdictions meet that threshold.
He noted that the absence of clear guidance makes it difficult for firms to design viable business strategies, underscoring the need for greater regulatory certainty before committing capital.
Harries also highlighted decentralized finance (DeFi) as an area lacking clarity, cautioning that earlier proposals could limit centralized platforms from facilitating access to DeFi services.
She argued that the U.K.’s stance on DeFi will be decisive, adding that overly restrictive policies could leave it out of step with jurisdictions such as the United States, where regulators are increasingly incorporating DeFi into broader tokenization frameworks.
In addition to policy concerns, firms must contend with a demanding authorization process. Thomas Cattee, a partner at Gherson Solicitors, warned that companies seeking approval under the new Financial Services and Markets Act face a high likelihood of rejection.
He pointed out that even the existing anti-money laundering (AML) registration regime—much narrower in scope—has already proven highly stringent, with more than 85% of applications either rejected or withdrawn. The new framework significantly broadens requirements, covering consumer protection obligations, prudential standards, operational resilience, and senior management accountability.
Cattee also advised firms to avoid delaying applications, referencing the rollout of MiCA in Europe, where late submissions created licensing bottlenecks that left some firms without approval.
For institutional investors, the framework represents more than just a regulatory update. Sandy Jones, director of digital assets at Baillie Gifford, said that while regulation does not inherently make crypto safer, it provides the legal certainty and governance standards required for traditional financial institutions to adopt blockchain infrastructure.
He added that although the technology itself is powerful, it cannot bridge the gap to mainstream finance without clear legal frameworks, operational robustness, and recognized governance standards.
Jones also welcomed recent refinements to the FCA’s stablecoin regime, noting that they support the development of efficient settlement infrastructure without imposing unnecessary operational burdens.
Overall, industry reaction suggests the FCA is positioning the U.K. as a commercially pragmatic alternative to the EU’s MiCA regime. However, whether this approach translates into increased adoption will depend less on the ambition of the rules and more on how consistently and predictably they are implemented.
The key challenge will be ensuring that regulatory gaps and a demanding authorization process do not undermine the competitive advantages the framework is designed to deliver.
