In March 2022, the Financial Conduct Authority (FCA) took a decisive stance, ending the UK’s Temporary Registration Regime (TRR) for cryptoasset enterprises.
Following the regulator's identification of vulnerabilities concerning financial crime and anti-money-laundering (AML), numerous applications were withdrawn, and others were refused, resulting in only 33 firms securing full registration.
Shift in Investor Activity and Persistent Risky Presales
The tightening of domestic regulations has led to an increase in retail investor activity moving overseas, rather than a decline in the fundamental demand for cryptocurrency. This trend is exemplified by the continued popularity of risky presales, such as BTC hyper coin. This layer-2 project, inspired by Bitcoin, claims to enable DeFi-style staking on an independent high-throughput chain and accelerate BTC transactions. Specialized media reports indicate that this presale has already attracted tens of millions of dollars from investors globally, including those outside the jurisdiction of the Financial Conduct Authority (FCA).
Background of the Temporary Registration Regime (TRR)
The TRR was initially conceived as a temporary measure. Introduced in 2020, it allowed businesses that had already applied for registration under UK anti-money-laundering laws to continue operating while their applications were under review by the Financial Conduct Authority (FCA).
After a single extension, which concluded on March 31, 2022, the regulator officially terminated the regime. This action was accompanied by warnings of criminal penalties for unregistered enterprises continuing to serve clients in the UK. Companies such as Wirex opted to relocate or serve British consumers from other jurisdictions, with Wirex withdrawing its application and refocusing its operations on the EU market.
Development of a Comprehensive Regulatory Framework
The United Kingdom has been actively developing a more comprehensive regulatory structure. In February 2023, HM Treasury announced the "future financial services regulatory regime for cryptoassets." By October 2023, the department had finalized its plans to bring various exchange, custody, and lending operations under the purview of the Financial Services and Markets Act (FSMA).
A proposed Statutory Instrument, released in April 2025, outlines the creation of new regulated activities for cryptoassets under the Regulated Activities Order. This aims to transition parts of the cryptocurrency industry into fully-fledged financial services, subject to FCA authorization and conduct regulations.
New Rules Targeting Financial Promotions and Enforcement
The most significant change for companies has been the implementation of a new financial promotions system. As of October 8, 2023, any company advertising "qualifying cryptoassets" to consumers in the United Kingdom must comply with FSMA promotion guidelines, or face criminal penalties.
Compliance requires either authorization or reliance on specific exemptions for certain categories of investors. Following this, the FCA has been proactive in signaling its intent to test these new powers in court, issuing a series of warnings and detailed guidance.
In October 2025, the FCA took a notable step by suing the exchange HTX (formerly Huobi) for alleged unlawful advertisements. Investigations by the Financial Times revealed that over half of the cryptocurrency advertisements flagged to platforms between October 2023 and October 2024 remained active, underscoring the ongoing nature of enforcement efforts.
Regulation of Systemic Stablecoins
Concurrently, the Bank of England is advancing plans to regulate systemic stablecoins. A consultation paper released in November 2025 detailed proposed regulations for stablecoins denominated in sterling. These proposals include a requirement for 40% of reserves to be held in interest-free accounts at the central bank, with up to 60% of reserves permitted to be held in short-term UK government debt.
Exemption from Consumer Duty Rules
According to the FCA, traditional conduct norms may require adjustments for a high-risk asset class like cryptocurrency. Consequently, as their authority expands in 2026, newly regulated crypto operations will initially operate outside the UK’s comprehensive consumer duty regulations.