The U.K. FCA's crypto regulations are designed to boost global liquidity and institutional engagement, but the approval process may be arduous.
By Jamie Crawley, AI Boost|Edited by Aoyon Ashraf Jul 4, 2026, 12:00 p.m. 3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on London, U.K. (Cj / Unsplash+)SummaryShow- Industry experts commend the FCA's focus on global liquidity and the acceptance of foreign stablecoins.
- However, doubts surrounding international crypto operations and a rigorous authorization process might deter participation.
- That said, the framework's legal clarity could significantly encourage institutional adoption.
This week, the U.K.'s Financial Conduct Authority (FCA) revealed its cryptocurrency regulatory framework, receiving initial recognition for its globally oriented strategy. Nevertheless, industry stakeholders indicate that vital uncertainties must be addressed for the U.K. to solidify its position as a global crypto center.
The FCA's regulatory package aims to maintain access to international liquidity through foreign trading platforms and allows the circulation of non-U.K.-issued stablecoins, according to various industry representatives.
Katie Harries, Coinbase's head of policy for Europe, stated in a Telegram message, "The release of the FCA's definitive crypto regulations marks a significant step towards regulatory transparency and a favorable outcome for the U.K.'s standing in digital asset innovation."
Furthermore, the FCA's initiatives regarding global liquidity and non-local stablecoins stand in contrast to what many in the industry perceive as the EU's more protectionist stance embodied in the Markets in Crypto-Assets (MiCA) regulation, which effectively encourages firms to isolate their European operations and liquidity.
The new Qualifying Cryptoasset Trading Platform (QCATP) model from the FCA is expected to enable foreign exchanges to cater to U.K. clients through branches authorized locally that are linked to the existing global trading framework, as explained by Christopher Collins, a partner in financial markets and regulation at Katten Muchin Rosenman.
Collins elaborated, "This approach allows U.K. clients access to established global liquidity from offshore trading platforms, rather than confining them to a U.K.-specific liquidity pool, which should result in improved pricing and outcomes for customers in the U.K."
However, Collins cautioned that the framework currently leaves a crucial issue unresolved.
The FCA stated that foreign branches will be approved only if their home jurisdictions meet "comparable levels of regulatory protection," but it has yet to clarify which jurisdictions fulfill this criterion.
"That lack of clarity is not sufficient for firms to develop a viable business model," Collins remarked, asserting that businesses need more certainty before committing to U.K. operations.
Harries also pointed out that DeFi remains an open question, warning that previous proposals could effectively restrict centralized platforms from providing access to decentralized finance applications.
"The U.K.'s forthcoming policy on DeFi will be crucial," she asserted, suggesting that such limitations could place it at odds with regions like the U.S., where regulators are considering DeFi within broader tokenization frameworks.
Regulatory Challenges
In addition to policy uncertainties, firms face a substantial authorization process.
Thomas Cattee, a partner at Gherson Solicitors, warned that there is "a very high risk of failure" for companies trying to gain authorization under the new Financial Services and Markets Act framework.
He noted that the current AML registration process with the FCA is already extremely rigorous, with the FCA rejecting or compelling the withdrawal of more than 85% of applications. The new framework will introduce significantly broader requirements related to Consumer Duty, prudential standards, operational resilience, and senior management accountability.
Cattee also advised companies to avoid delaying their applications, referencing the rollout of MiCA in Europe, where many businesses postponed until deadlines approached, resulting in licensing delays that left some firms unauthorized in time.
For institutional investors, however, the new framework signifies more than just an additional set of crypto regulations.
Sandy Jones, director of digital assets at Baillie Gifford, emphasized that regulation does not inherently enhance crypto safety but provides the legal clarity and governance standards necessary for traditional financial institutions to adopt blockchain technology.
"The underlying technology is powerful, but it does not create a direct pathway into mainstream financial markets by itself," Jones stated. "Legal clarity, operational resilience, proper governance, and recognizable rules for investors and institutions are essential."
Jones also applauded the FCA's recent adjustments to its stablecoin regulations, arguing that they establish a solid settlement infrastructure without introducing excessive operational friction.
The industry's feedback suggests that the FCA has strategically positioned the U.K. as a commercially sensible alternative to the EU's MiCA regulations. However, whether this will lead firms to favor the U.K. over other jurisdictions will rely less on the framework's ambition and more on its consistent implementation in the coming months.
The challenge lies in ensuring that the authorization process and remaining policy gaps do not diminish potential competitive advantages before they can be fully realized.
UKAI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.Latest Crypto News- 1XRP climbs 8% as record holder losses signal better risk-reward for buyers5 hours ago
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