The UK intends to fully regulate crypto assets, and the new draft includes stablecoin issuance, trading platforms, custody and staking businesses

The UK government recently published the draft "Financial Services and Markets Act 2025 (Regulated Activities and Other Provisions) (Crypto Assets) Order", planning to incorporate seven key activities involving stablecoins and other qualifying crypto assets into the financial regulatory framework. This marks an important step towards establishing a world-class crypto asset regulatory environment in the UK.

Seven Crypto Activities Incorporated into FCA Authorization Framework

According to the draft, the following activities will require a Part 4A permit from the UK Financial Conduct Authority (FCA), otherwise violating Section 19 of the Financial Services and Markets Act:

1. Issuing qualifying stablecoins (such as fiat-pegged stablecoins)

2. Custody or management of user crypto assets (custodial wallets)

3. Operating crypto asset trading platforms

4. Proprietary trading (buying and selling crypto assets in one's own name)

5. Agency trading (buying and selling on behalf of users)

6. Arranging crypto asset transactions between third parties

7. Assisting in Staking and participating in blockchain verification mechanisms

These new activities are collectively classified as "Cryptoasset Regulated Activities" in Chapter 2B of the Regulated Activities Order.

Clearly Defining Qualifying Crypto Assets and Stablecoins

The draft also clearly defines "Qualifying Cryptoasset" and "Qualifying Stablecoin" in the regulations for the first time:

• Qualifying Crypto Assets: Fungible and transferable, excluding electronic money, central bank digital currencies (CBDC), and non-resellable application tokens.

• Qualifying Stablecoins: Pegged to fiat currency, with stable value maintained through fiat asset holdings by the issuer, not classified as traditional deposits or electronic money.

Transition Period of Up to Two Years, Existing Operators Can Delay Application

To help operators not yet authorized transition smoothly, the draft establishes a two-year temporary exemption mechanism. By applying within the specified period, operators can continue to operate during the review process, but must disclose their unauthorized status to the FCA and their users. If ultimately rejected and waiving appeal rights, the exemption will automatically expire.

Financial Promotion and Anti-Money Laundering Regulations Updated Simultaneously

The draft simultaneously revises other financial regulations, including:

• Financial Promotion Order: Adding the above activities as "controlled activities", prohibiting marketing without authorization.

• Money Laundering and Transfer of Funds Regulations: Adding "authorized crypto asset company" status, requiring proactive registration of service nature and changes with the FCA.

• Electronic Money Regulations and Collective Investment Schemes Order: Excluding stablecoin underlying assets as part of electronic money or funds.

Government Seeks Comments Until May 25, Final Regulations Imminent

According to the government website, the Treasury is currently seeking technical opinions from industry and experts, with comment collection ending on May 25. The final version of regulations covering market abuse, asset listing, and information disclosure is expected to be officially released soon.