Consider how long you have worked to develop a crypto exchange and how many consumers from the UK you have on the books as customers. You have been in compliance with FCA legislation with regard to preventing money laundering, which gives you the ability to conduct business legally and to make profits. Everything has been going very well up to this point.
Then one morning in October 2027 you wake up and find yourself with a "no-go" on signing up any new customers, launching any new products, and expanding your existing business.
Your company will remain in a state of "regulatory amber" (deadlocked), which means it is not completely shut down but cannot continue to grow at all; your competition that submitted their applications within the appropriate time frame will continue to thrive as they have already received all regulatory audits and approvals (and subsequent launch) ahead of you. The events I have just described are not the stuff of fantasy or fiction this is exactly what will happen to many of the crypto businesses in the UK that fail to submit their application to the FCA before the September 2026 application window closes.
The Financial Conduct Authority of the UK has recently announced that it will accept applications for crypto licenses from September 2026, ahead of the start of a new regulatory framework in October 2027. While this may sound boring, it is one of the biggest changes in the history of crypto regulation.
By eliminating its "registration only" process, the UK will now be regulating cryptocurrency companies in the same manner as banks, insurance companies and investment firms under the forthcoming Financial Services and Markets Act of 2027. This law is designed to provide a similar level of regulation for crypto companies as exists for traditional financial institutions.
For years, bitcoin companies operated mobile food trucks – they could move and adapt to their surroundings, without any regulation whatsoever. But companies are now being told they need to have a full restaurant licence by October 2027 – just like Gordon Ramsay's restaurants have to comply with the same health and safety laws as every other restaurant. Companies will now also have the same level of responsibility for the conduct of their operations and their customers as do all other licensed food establishments.
And what about the application window? Companies will have no less than 28 days and no more than 28 days prior to the launch of this new framework to file their applications. Companies will only have about a month to submit their applications; if their applications do not go through, then they can no longer operate in the UK.
Sophie manages a regulated Cryptocurrency Trading Platform with 15000 active users located within the United Kingdom. As with all regulated business activities under current legislation, all businesses must register with the Financial Conduct Authority (FCA). Sophie has achieved full compliance with FCA laws and regulations and believed she was ready to operate legally; however, she must first obtain an AML and Payment Service Registration with the FCA again as they will not transfer over. Although Sophie worked diligently for the past three years maintaining a compliant business activity, having a current registered status, and having an extremely clean regulatory history, none of those will transfer or carry over. The reason being that under the new regulations, many additional requirements were added in addition to standard checks to prevent money laundering and these include; Capital Adequacy, Operational Resilience, Governance Standards, Consumer Disclosures and Continuing Monitoring. This means, the same rules applied to traditional Financial Transactions are being applied to Cryptocurrency Transactions. All businesses that currently operate under FCA Regulations are required to update their permissions in order to provide Cryptocurrency Services, regardless of their current operating permission level, prior to the 2022 deadline.
Dozens of companies in the cryptocurrency space could be affected by this notice. The FCA is informing crypto companies currently using another FCA-approved entity to promote their services that for these companies to advertise in the UK, they must be directly authorized by the FCA.
Existing crypto companies have been able to create a workaround to use non-FCA authorized platforms to promote products to the UK market using creative marketing strategies. Before October 2027, crypto loans can be marketed to customers in the UK through an approved company, allowing crypto companies to operate without full FCA licensing.
For instance, James operates a Crypto Loan Protocol. James's platform is not FCA approved, so he currently works with an approved company to promote his advertisements to potential customers in the UK, which is no longer legal under the amended FCA rules and regulations. James would not be permitted to promote his services to prospective customers in the UK without first obtaining direct approval from the FCA.
How many companies will be impacted? Hundreds, if not thousands, will likely be affected, but most crypto companies are not aware of the new FCA requirements.
If you miss the application timeline for the UK market, your company will have to function under a transitional regime. This means that even though you will still be able to service your existing customers, you will not be able to add any new customers, provide any new products or expand your UK business operations at all. In other words, your company will not die; however, it simply will stop growing and you will be left behind the competition.
Now think about that for a moment. How would you feel about having to go back to your investors and say, "We are making money, and growing, but we are not able to get any new customers in the UK for 12-18 months while we wait for our applications to be processed." What is the likelihood that your investors will want you to continue to operate in the UK after hearing that?
Alternatively, imagine that your company has just locked in a Series A round of funding and you are witnessing early signs of success in the UK market. How would you feel if you missed the September deadline and as a result, you were left with nothing but what you anticipated was your runway and your growth objectives would vanish?
Although September 2026 seems far away (8 months), it is important to understand that it will take you a lot longer than that to prepare your governance structure, capital buffers, consumer protections and operational resilience for an FCA Licence. It may seem like a long time to complete an FCA application, however, most Crypto Companies (especially Start-Ups and Medium-Sized Companies) will spend several months preparing for the FCA Licence process by hiring compliance experts, restructuring their company, and building new systems.
Since FCA Processes were enhanced to improve processing speeds and acceptance rates. The Approval Time to obtain a FCA licence decreased from 17 months to the average of 5 months, and the Acceptance Rate increased from 15% to 45%. This is a positive change. Simple FCA Applications will take approximately 5 months to complete while more complex FCA applications will take longer.
If you have not started your application process at this point in time, you will likely not be able to complete your application in time for the September 2026 deadline.
Kevin Huly is right - many smaller firms (under £100 million) will survive the regulations. That's because they can hire an army of lawyers and compliance officers to help them navigate through the new rules.
Where there will be a bloodbath is for mid-sized platforms, DeFi Protocols where at least 1 user in the UK resides, Virtual Asset Staking Providers, Crypto Asset Lending Platforms and particularly for International Companies wishing to Market/Sell their Products to UK's Citizens.
The remit of the UK Regulations covers every Virtual Asset Business wishing to operate or market within the UK market including Non-UK based Companies who are offering these products in or to customers in the UK - this is where Non-UK Platforms don't have an advantage or "free pass". Virtual Asset Businesses must comply with UK Regulations regardless of whether or not they hold UK offices to market and operate in the UK.
A Platform based in Singapore with 5,000 customers in the UK is still going to have to obtain authorisation from the FCA. A Decentralised Protocol that has holders of tokens based in the UK or has users in the UK will also require an authorisation. A Virtual Asset Staking Service based in Estonia targeting consumers in the UK will fall under the scope of the UK Regulations. Many businesses thought that by simply marketing from afar would allow them to stay away from regulatory requirements and are going to realise that the regulation requirements will impact them further than what they may have anticipated.
Despite everyone's fear over compliance expenses, this pandemonium hides a huge opportunity.
The UK has declared war on fraudulent crypto firms. Firms that don't meet banking norms are eliminated. Until your company passes the licensing procedure, that sounds severe.
Your market competition shrank dramatically after October 2027. You passed regulatory hurdles that eliminated scammers, so customers trust you more. Institutional investors who wouldn't touch bitcoin now trust FCA-authorized platforms.
Ripple received FCA approval to extend UK crypto payments. JPMorgan launches $100 million Ethereum tokenised money-market fund. Real financial institutions are betting on regulated crypto infrastructure.
Companies seeing September 2026 as a death threat will struggle. Companies seeing it as a competitive advantage will succeed.
If your crypto business has UK exposure, follow this plan:
Assess your scope now. Are there UK customers? Marketing to UK residents? Yes? You're likely covered.
Work out your preparation schedule. When should you prepare documentation if approval takes five months and the window opens September 2026? Probably June latest. Work usually takes six to eight months, so five months from now.
Find holes. Compare your governance, compliance, and operations to banking standards. Where are you failing? You must fill those holes before applying.
Professional help budget. This isn't DIY. You need financial regulatory lawyers, FCA-savvy compliance specialists, and possibly governance restructuring.
Assess your UK market value. Does the UK market warrant this effort? If British clients make up 2% of your business and achieving these rules costs millions, abandoning the UK market may be wise.
The UK isn't alone. This authorization gateway helps the UK meet international requirements including the EU's MiCA framework. Britain's crypto integration into financial regulation is the model for wealthy nations.
The Wild West ends. Companies that survive the change, not crypto regulation, are the issue.
Ten years from now, September 2026 will be a turning point. The month the UK crypto sector split into prepared and successful enterprises and unprepared and failing firms.
The window opens in 8 months. Ticking clock. This deadline is irreversible, unlike blockchain transactions.
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