MLR-registered crypto firms must apply for full FSMA authorisation to keep operating in the UK after 25 October 2027. Registration does not convert. The FCA window for applications opened on 30 September 2026 and closes on 28 February 2027. Applying inside it matters: a firm that applies in the window can keep trading if the FCA has not decided by 25 October 2027, while a later applicant can only service existing contracts.
The transition from Money Laundering Regulations (MLR) registration to Financial Services and Markets Act (FSMA) authorisation is the most significant regulatory change for UK cryptoasset businesses since the introduction of FCA crypto registration in 2020. The Cryptoassets Regulations 2026 establish a comprehensive regulatory framework that will transform crypto firms from AML-registered entities into fully authorised financial services firms. This article provides a practical transition roadmap.
The Current MLR Registration Regime
Under the current regime, UK cryptoasset businesses providing exchange services or custodian wallet services must register with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. MLR registration is a relatively light-touch regime focused primarily on anti-money laundering controls. Registered firms must demonstrate adequate AML/CFT frameworks, fit and proper management, and sufficient financial resources, but they are not subject to the full range of FCA conduct of business rules, capital requirements, or prudential standards that apply to authorised firms.
What FSMA Authorisation Means
FSMA authorisation brings cryptoasset firms within the same regulatory framework as banks, payment institutions, EMIs and investment firms. This means:
Capital requirements. The FCA's final prudential rules (PS26/12, June 2026) require own funds of at least the highest of a permanent minimum requirement, a fixed overheads requirement and a K-factor requirement that grows with activity.
| Activity | Permanent minimum requirement | FCA application fee |
|---|---|---|
| Arranging deals, dealing as agent, staking | £75,000 (staking £150,000) | £2,820 |
| Safeguarding qualifying cryptoassets | £150,000 | £11,260 |
| Operating a trading platform | £150,000 | £28,150 |
| Issuing qualifying stablecoin | £350,000 | £11,260 |
| Dealing as principal | £750,000 | £11,260 |
A firm applying for several activities holds the highest applicable minimum and pays the highest applicable fee once.
Conduct of business rules. FSMA authorisation brings firms within scope of FCA conduct rules for the first time, including fair treatment of customers, clear communications, conflicts of interest management, best execution for trading platforms, and suitability assessments for advisory services.
Consumer Duty. The FCA Consumer Duty will apply to cryptoasset firms serving retail customers. Firms must demonstrate that products deliver good outcomes, provide fair value, and are supported by effective consumer understanding and support.
Governance and SMCR. The Senior Managers and Certification Regime (SMCR) will apply, requiring firms to allocate specific responsibilities to senior managers and to certify that relevant staff are fit and proper.
Custody. Firms holding client cryptoassets must meet the CASS 17 rules on segregation, records and reconciliation.
Prudential reporting. Authorised firms will be subject to regular regulatory reporting requirements, providing the FCA with data on financial resources, transaction volumes, customer numbers and risk indicators.
Transition Timeline
| Date | Event |
|---|---|
| 4 February 2026 | SI 2026/102 made by HM Treasury |
| June 2026 | FCA final rules published, including PS26/10 to PS26/13 |
| 30 September 2026 | FCA application window opened |
| 28 February 2027 | Application window closes |
| 25 October 2027 | New regime starts; MLR registration alone no longer enough |
FSMA section 55V requires the FCA to decide a complete application within 6 months and any application within 12 months. The FCA has said it expects to decide applications made in the window before the regime starts.
Saving provision. A firm that applies in the window and is still awaiting a decision on 25 October 2027 can continue its crypto business, including new business, until the decision is final.
Transitional provision. A firm that applies after the window but is not authorised by 25 October 2027 can only perform existing contracts and cannot take new UK customers.
No application. A firm that does not apply must wind down its UK crypto business before 25 October 2027.
An application that lacks the FCA's minimum information can be rejected and treated as not made, which removes access to both provisions. A complete application is therefore the priority.
Preparing for the Transition: Step by Step
Step 1: Scope the permissions. Map your business to the seven new activities: issuing qualifying stablecoin, safeguarding, operating a trading platform, dealing as principal, dealing as agent, arranging deals and staking. The permissions you choose set your capital, fee and conduct rules.
Step 2: Fund the capital. Hold own funds above the permanent minimum for your activities, with a buffer for the fixed overheads and K-factor requirements.
Step 3: Set up governance. Appoint senior managers, allocate responsibilities and set up the certification regime.
Step 4: Write the policies. Consumer Duty, complaints, conflicts of interest, best execution where relevant, CASS 17 custody, financial crime, operational resilience and wind-down planning.
Step 5: File inside the window. Submit a complete application through FCA Connect before 28 February 2027, using the FCA's information document and financial data template. Firms already authorised under FSMA apply to vary their permission instead.
What Firms Should Do Now
The window is open now and closes on 28 February 2027. Firms that have not started should run a gap analysis immediately, fund their capital, and aim to file a complete application well before the closing date. See our guides to UK cryptoasset authorisation and UK cryptoasset AML registration. Firms also serving EU customers should consider EU MiCA CASP authorisation.
Regulatory Counsel manages the full MLR-to-FSMA transition for cryptoasset firms, from initial gap analysis through to authorisation. Contact us for a written proposal.
Frequently asked questions
The FCA application window opened on 30 September 2026 and closes on 28 February 2027.
No. From 25 October 2027 MLR registration alone is not enough. Firms need FSMA authorisation, or must be relying on the saving provision (applied in the window) or the transitional provision (applied later, existing contracts only).
The permanent minimum requirement is £75,000 for arranging or dealing as agent, £150,000 for safeguarding, staking or operating a trading platform, £350,000 for stablecoin issuance and £750,000 for dealing as principal. Own funds must be at least the highest of that minimum, the fixed overheads requirement and the K-factor requirement.
The conduct of business and governance requirements are typically the biggest gaps. MLR registration focuses on AML; FSMA authorisation requires comprehensive conduct rules, Consumer Duty compliance, SMCR implementation and prudential standards.
If you are not authorised by 25 October 2027 you enter the transitional provision. You can only perform existing contracts and cannot take on new UK customers until the FCA decides.
No. The FCA has confirmed there is no automatic conversion. Every registered firm that wants to continue must apply for FSMA authorisation, and firms already authorised under FSMA must apply to vary their permission.
£2,820 for arranging, dealing as agent or staking, £11,260 for dealing as principal, safeguarding or stablecoin issuance, and £28,150 for operating a trading platform. A firm applying for several activities pays the highest applicable fee once.
Definitive guides on this topic
The permanent reference pages this article relates to.