The UK's Financial Conduct Authority (FCA) application gateway opened on Wednesday, and the February 28, 2027 deadline is very easy to misunderstand. Missing it doesn’t mean a firm is automatically barred from applying. What it changes is what the firm can legally do when the new regime takes effect on October 25, 2027.
Those firms that apply before the deadline but are still awaiting a decision when the regime begins to function can continue to operate under a saving provision in the Treasury's statutory instrument that includes taking on new customers. The protection remains in place until the FCA delivers its final decision, unless the firm challenges the refusal from the Upper Tribunal.
Firms that miss the deadline will find it much harder to apply. The guidance says that these can still submit an application to the FCA before the new regime commences but that late applications will not be prioritized or subject to an accelerated review. If not authorized by Oct. 25, such firms will move into a transitional arrangement, which only allows them to continue to provide services under contracts concluded before that date. In other words, they can retain existing contracts but cannot acquire new existing customers or accept new customers.
Firms that fail to apply at all will have to terminate their UK crypto business before the new regime starts and will find themselves committing a breach of the general prohibition in section 19 of FSMA if they continue to operate after that deadline.
Existing registrations will not carry over either. A money laundering registration does not transform into authorization under the new regime. Payment and e-money firms will have to secure separate FSMA authorization for their crypto activities, while FCA-authorized firms will need to apply to vary their existing permissions.
The more challenging question for some firms is whether they require permission at all as neither the FCA's perimeter guidance, PS26/18, published on Sept. 16, nor the Treasury's amended Treasury guidance (which contains changes to technical services, stablecoins, proprietary trading, market making and decentralized protocols) currently make it clear. The FCA has a further consultation in October and intends to issue updated final guidance in early 2027, around the same time as the application window closes.
It leaves firms making judgments in the interim period as cryptoUK highlighted, observing that it "would welcome as much practical certainty as possible during this period." For infrastructure providers in particular, these changes could affect whether they have to seek FCA permission at all.
The guidance does clarify the position on crypto lending and borrowing as neither is considered a standalone regulated activity but the manner in which a service is structured can mean that it falls within other regulated activities including that of dealing, arranging or safeguarding.
And while firms will have to provide the appropriate documents for authorization, Capco's Aditya Mittal told Payment Expert that "having policies on paper will not be enough." The FCA will look to see who is responsible for implementing policies, that controls operate effectively within the firm and that the data that supports this is reliable.
The FCA is offering pre-application meetings for free but firms are expected to do some work themselves first. Requests can be rejected if a company has not completed the work required for it to understand which regulated activities it intends to apply for, while the FCA may also require to see the legal advice behind an assessment of those activities.