UK FCA to open crypto license applications next fall; companies need to prepare 18 months in advance

The UK Financial Conduct Authority (FCA) has officially confirmed the timeline for the new crypto asset regulatory framework. Starting from September 2026, crypto asset service providers (CASPs) can apply to enter the UK market, with the new system officially taking effect on October 25, 2027. This means the UK crypto industry is entering a new era of compliance, leaving businesses with less than two years to prepare.

Key Requirements of the New System

Application Eligibility and Authorization Pathways

FCA requires all companies providing regulated crypto asset services in the UK to obtain authorization under the Financial Services and Markets Act (FSMA). This includes three types of enterprises:

• Crypto companies currently registered under the Anti-Money Laundering Regulations and payment frameworks, needing to transition to formal authorization
• Companies already authorized by the FCA to engage in other regulated activities, needing to amend existing permissions before the new system
• Crypto companies relying on other authorized companies to approve financial promotions, requiring direct FCA authorization

Application Window and Processing Time

This design provides companies with a clear deadline, but the application window itself is limited. FCA emphasizes that companies missing this window can still apply, but the assessment process may be significantly longer.

Transition Rules and Corporate Responses

Consequences of Missing the Application Window

The legislative draft’s “transitional provisions” offer some buffer for companies. Specifically:

• Companies that miss the application window or are not authorized when the new system starts can continue operating existing products
• However, these companies are prohibited from launching new products, effectively frozen within their current scope of business
• Late applicants can still submit applications, but FCA explicitly warns that evaluation times may be much longer than normal procedures

Three Response Strategies for Companies

Based on the latest updates, companies should clearly assess their current situation and develop corresponding strategies:

Path 1: Proactive Approach - Large exchanges and service providers with sufficient compliance resources should complete application preparations before September 2026 to strive for early approval

Path 2: Steady Progress - Medium-sized enterprises can utilize the transition period to continue operating existing businesses while gradually improving compliance systems in preparation for future applications

Path 3: Observation and Adjustment - Small or emerging companies can evaluate the UK market prospects during the transition period and decide whether investing in compliance is worthwhile

Market Impact and Industry Significance

Rising Compliance Costs

From related news, leading market makers like GSR Markets already hold dual licenses from FCA and Singapore MAS. This indicates that obtaining FCA authorization is now recognized as valuable by the market, but it also means compliance costs will rise significantly. Smaller firms may be pushed out of the UK market, leading to increased industry concentration.

Enhanced Market Position of the UK

The FCA’s new framework shows that the UK is establishing the clearest crypto regulation system in Europe. Beyond the EU’s MiCA framework, the UK has the opportunity to become an independent crypto financial hub. This is crucial for strengthening London’s status as a global financial center.

Accelerated Industry Standardization

From fall 2026 when applications open to October 2027 when the system is officially implemented, the 18-month preparation period is the industry’s final chance for self-regulation. Projects that fail to pass compliance checks will be removed from the UK market, which will improve overall market quality.

Summary

The FCA’s new timetable has been finalized, with the September 2026 application window being a key milestone. For crypto companies operating in or planning to enter the UK market, it is now essential to start compliance preparations. Although transitional rules provide some buffer, missing the application window will result in being frozen within existing business scope, with limited ability to launch new products. This policy framework marks a shift from unregulated growth to a regulated industry, with rising compliance costs but a healthier, more sustainable market in the long run.