UK Sets 2027 Start Date for Crypto Rules, Grants Prop Traders Licence‑Free Market Making

The United Kingdom's comprehensive cryptoasset regulatory regime will commence on 25 October 2027, with new amendments specifically exempting proprietary traders from licensing for market making activities.

Parliament established a new regulatory framework for cryptoassets earlier this year. This framework aims to integrate digital assets into a supervised environment, aligning with existing financial regulations.

The Financial Services and Markets Act 2000 (Cryptoassets) (Amendment) Regulations 2026 confirms the full regulatory regime for cryptoassets takes effect on 25 October 2027. This provides a clear timeline for firms operating within the digital asset space.

A key amendment introduces an exclusion for proprietary trading in qualifying cryptoassets. Firms engaging in market making on their own account, without providing a service to a client, will not require a UK license for this activity.

HM Treasury asserts this exclusion is necessary to prevent an uncompetitive dynamic. Without it, requiring a Financial Conduct Authority license for own-account crypto dealing would likely push proprietary trading operations offshore, reducing market liquidity within the UK.

HM Treasury is currently seeking public comments on these draft amendment regulations. Stakeholders can submit feedback until 22 May 2026.

This targeted adjustment to the regulatory perimeter ensures UK-based proprietary trading firms can continue to provide crucial market making services. It removes a potential barrier that could have hindered the growth of domestic crypto liquidity providers.

The amendments also address other specific areas within the new regime. Central securities depositories (CSDs) and their nominees will see similar safeguarding exemptions applied to cryptoassets, ensuring consistent policy for tokenized securities.

Furthermore, firms providing stablecoin payment services will likely be excluded from needing licenses for dealing or arranging activities under the broader crypto regime. This streamlines operations for stablecoin providers already falling under payment services regulation.

The UK's financial promotions restriction will also align with the crypto investments regime. Issuing a qualifying stablecoin becomes a controlled activity, bringing it under the financial promotions framework.

Industry participants should monitor the public consultation outcomes and any further revisions to these regulations as the 2027 implementation date approaches.