UK Wholesale Banks Can Apply to Vary Permissions for Regulated Crypto Activities

Key Facts

The UK Financial Conduct Authority said wholesale banks can now apply to vary their existing permissions to conduct regulated cryptoasset activities, allowing banking institutions to enter the scope of the new regulatory framework. In its report on wholesale banks’ supervision, the FCA said: "Wholesale banks can now apply to vary their permissions to conduct regulated cryptoasset activities." The route concerns amending permissions banks already hold; it does not grant them automatic authorisation or open a new application window. The FCA opened the new regime’s application window to all firms on 30 September 2026. The comprehensive UK regime is due to take effect on 25 October 2027, making the timing of an application a factor in how activity can continue during the transition period.

The activities covered by the regime and subject to FCA supervision include cryptoasset custody, operating trading platforms, dealing and arranging deals, as well as issuing stablecoins and staking. This means the route is not limited to holding assets on behalf of clients, but also extends to operating platforms and providing services related to executing transactions and issuing digital instruments. The FCA is encouraging banks to apply to vary their permissions by 28 February 2027. It said applicants filing before that date would be notified of the outcome before the regime takes effect, or could continue cryptoasset activities while their application was under consideration if no decision had been issued by then. Early filing is therefore linked to the possibility of avoiding an interruption to activity if an application remains under review when the regime begins.

A bank applying after 28 February 2027 and before the full regime starts on 25 October 2027 will be subject to transitional provisions throughout the period in which its application is being decided. During that period, it cannot enter into new contracts with existing or new clients, and its activity is limited to fulfilling contracts entered into before it entered the transitional phase. The FCA said firms in this position "will be restricted in the cryptoasset activities they can carry on." The earlier date is therefore not a requirement for continuing operations, but distinguishes between an application that can be considered while activity continues and a late application subject to operational restrictions. The period between the date by which the FCA encourages applications and the start of the regime is about eight months, based on the two dates set by the regulator.

Permission to conduct these activities is not automatic: the FCA requires firms to demonstrate that they meet its requirements before allowing them to operate in the UK market. Assessment criteria include consumer protection, safeguarding client assets, market integrity and financial resilience. The FCA said firms "are assessed against its standards on consumer protection, safeguarding client assets, market integrity and financial resilience." This puts banks on a path that combines varying their existing permissions with demonstrating their ability to meet regulatory standards covering client and market risks and financial capacity. The regulations that brought cryptoassets within the FCA’s regulatory remit were approved by the UK Parliament on 4 February 2026.

The regime expands the FCA’s supervisory role. It said the new regulations brought a broad range of cryptoasset activities within its remit for the first time, going beyond a previous framework limited to anti-money laundering and financial promotions. The FCA said work on the framework had included, since 2023, 4 discussion papers and 10 consultation papers. It said the rules set standards for regulated activities, strengthen consumer protection and provide firms with a clearer framework for operating in the UK. As the regime’s start date approaches, the application window allows banks to assess whether to seek changes to their permissions to continue providing custody, trading, issuance and other covered activities. The next step for the banks concerned is to submit applications by 28 February 2027 if they want to avoid the restrictions associated with the transitional provisions.