Working with digital assets in the UK falls within the legal framework. The state is establishing rules for the cryptocurrency market while simultaneously supporting the development of digital technologies and ensuring the protection of market participants.

 

In 2026, the regulation of cryptoassets in the UK is undergoing an active transformation. The existing rules are being supplemented by a new financial regime that will come into effect in 2027. Therefore, it is particularly important for businesses and individuals to understand right now how to legally work with cryptocurrency in the UK.

 

In this article, we will consider the general principles of working with virtual currencies in the UK. If, however, you want to delve into the legal details and assess the requirements applicable to a specific project, contact AA Lawrange.

 

Is It Legal to Work with Cryptocurrency in the UK

Owning and using cryptoassets in the UK is not prohibited. The tax authority (HMRC) does not treat virtual currency as money; however, working with it does not constitute illegal activity or tax evasion.

 

At the same time, any cryptocurrency transactions must be carried out in compliance with the requirements established by law. Depending on the nature of such transactions, these may include measures to combat money laundering and terrorist financing, requirements for the protection of customers and assets, risk management, the financial sustainability of the business, and the disclosure of necessary information.

 

How Is Cryptocurrency Regulated in the UK

If you want to understand how to legally operate a crypto business in the UK, you first need to understand one point: regulation of this area in the country is being formed at several levels simultaneously. The current rules require compliance with AML/KYC requirements aimed at preventing financial crime.

 

At the same time, from 25 October 2027, a new regime based on the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (FSMA) will come into effect. This secondary legislation significantly expands the scope of financial supervision. In particular, certain rules will apply to public offers of cryptoassets and the prevention of market abuse.

 

Which Cryptocurrency Companies Need FCA Registration in 2026

In 2026, a crypto company in the UK must register with the Financial Conduct Authority (FCA) if its activities fall under the current AML regime. This includes providers of cryptoasset exchange services and businesses providing custody services.

 

At the same time, from 30 September 2026, applications for authorisation under the new FSMA regime will open. It covers a broader range of activities, including:

 

  • operating trading platforms;
  • certain types of staking;
  • issuing qualifying stablecoins.

 

The need to obtain FCA authorisation is determined by the nature of the company’s activities, rather than by the mere fact that it works with cryptoassets. At the same time, it is important for businesses to take into account the transition to authorisation under FSMA.

 

FCA Registration in 2026 and FSMA Authorisation from 2027: What Is the Difference?

FCA registration and future FSMA authorisation have different legal natures and scopes of requirements:

 

Criterion FCA registration FSMA authorisation
Legal basis AML rules (MLRs) Financial Services and Markets Act 2000
Period In effect in 2026 New regime from 25 October 2027
What it confirms Compliance with AML requirements Compliance with broader financial regulatory requirements
FCA supervision In respect of compliance with AML requirements Full supervision of regulated activities
Scope of activities Exchange and custody of cryptoassets A broader range of regulated cryptoassets and services

 

Please note: the transition between the regimes does not take place automatically – an application for authorisation is required.

 

How to Register a Cryptocurrency Business with the FCA

Registration with the Financial Conduct Authority is a mandatory step for those interested in how to legally engage in cryptocurrency activities in the UK. The procedure involves several steps:

 

  1. Determining whether registration is required – it is necessary to establish whether the company’s activities fall within regulated cryptoasset services.
  2. Preparing documents – information must be provided about the company, its activities, directors, owners, and the AML/KYC measures it applies.
  3. Submitting an application – the application is submitted through the FCA Connect electronic system.
  4. Regulatory review – the authority reviews the application and, if necessary, requests additional information.
  5. Registration – following a positive decision, the company is entered into the FCA register of registered cryptoasset businesses.

 

Contact the lawyers of AA Lawrange to increase your chances of a fast and successful registration.

 

AML/KYC Requirements for Cryptocurrency Businesses in the UK

For cryptocurrency companies in the UK, compliance with AML/KYC requirements is a mandatory part of their activities. The main requirements include:

 

  • identification and verification of customers;
  • identification and verification of beneficial owners;
  • assessment of the risks of money laundering and terrorist financing;
  • verification of the purpose and nature of the business relationship;
  • ongoing monitoring of customers and transactions;
  • detection and reporting of suspicious activity;
  • retention of documents and data as required by law;
  • application of enhanced due diligence to high-risk customers and transactions;
  • having internal AML/KYC policies and procedures in place;
  • training employees on AML requirements.

 

In other words, to operate legally, cryptocurrency companies must apply a risk-based approach and have procedures in place that allow them to identify and control the relevant risks.

 

Cryptocurrency Taxation in the UK

In the UK, cryptoassets are subject to taxation depending on the nature of the transactions and the taxpayer’s status.

 

  • For individuals holding cryptoassets as an investment, the main tax applicable upon sale is usually Capital Gains Tax (CGT).
  • Income from mining, staking, airdrops, and certain other activities may be subject to Income Tax.
  • For companies, the tax regime depends on the nature of the business activities: Corporation Tax, capital gains tax, and other taxes may apply.
  • When trading cryptoassets, the profit is treated as trading income.

 

When working with cryptocurrency, it is important to correctly determine the tax nature of each transaction and reflect it in reports submitted to HMRC.

 

How an Individual Can Work with Cryptocurrency in the UK

UK legislation allows individuals to hold, buy, sell, and use cryptoassets. At the same time, HMRC requires owners to keep records of transactions, including the dates, type and quantity of assets, their value in pounds sterling, and information about accounts and wallets.

 

Individuals must also fulfil any resulting tax obligations. As a reminder, depending on the nature of the transactions and the income received, Capital Gains Tax or Income Tax may apply to cryptoassets.

 

How to Work with Cryptocurrency Through a Company in the UK

A UK company may legally use cryptoassets in its business activities. However, the legal and tax consequences depend on what exactly the business does – simply holding cryptocurrency on the company’s balance sheet does not automatically mean that it is required to register with the Financial Conduct Authority.

 

If a company provides regulated cryptocurrency services, it must comply with FCA requirements. In addition, transactions involving cryptoassets are taken into account for tax purposes. Depending on the nature of the business activities, Corporation Tax and other taxes may apply.

 

Thus, registering a company in England allows a business to legally work with cryptocurrency. The key point is that the regulatory regime is determined by the nature of the activities, rather than by the legal form of the business.

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New Cryptoasset Regulatory Regime in the UK from 2027

We have already written that from 2027, a new cryptoasset regulatory regime based on FSMA will come into effect in the UK. Its purpose is to incorporate the cryptocurrency market into the country’s broader financial regulatory system.

 

The main innovations are as follows:

 

  • mandatory FCA authorisation for regulated activities;
  • strict requirements for conducting business and protecting customers;
  • new rules for trading platforms and intermediaries;
  • enhanced regulation of cryptoasset custody and certain types of staking;
  • specific requirements for the issuance of stablecoins;
  • rules against abuse in the cryptocurrency market.

 

The new regime moves cryptoasset regulation from the AML sphere into a full-fledged financial supervision system comparable to the regulation of traditional financial services.

 

How to Prepare for the New FCA Requirements

How can you legally work with cryptocurrency in the UK after the Financial Services and Markets Act 2000 (Cryptoassets) Regulations come into force? The FCA recommends starting preparations before applications open on 30 September 2026.

 

The main steps are:

 

  1. Determine which types of activities will require authorisation.
  2. Conduct a compliance analysis of current processes against FSMA requirements.
  3. Review the management and internal control system.
  4. Determine those responsible for preparing for authorisation.
  5. Prepare a plan of the necessary changes and a timeline for their implementation.
  6. Assess the necessary resources and costs.
  7. If necessary, engage legal and compliance consultants.

 

The final step will make it possible to eliminate any identified deficiencies in a timely manner and submit a well-prepared application to the regulator.

 

Liability for Illegal Cryptocurrency Activities in the UK

With the introduction of the new regime, cryptoassets are becoming part of the regulated financial sector, while the Economic Crime and Corporate Transparency Act 2023 expands the powers of law enforcement authorities in relation to assets connected with criminal activity.

 

Depending on the nature of the violation, the following may apply:

 

  • fines;
  • a ban on carrying out regulated activities;
  • criminal prosecution;
  • imprisonment in cases provided for by law;
  • freezing and seizure of cryptoassets;
  • their subsequent confiscation or transfer to the state.

 

Illegal activities involving cryptoassets may affect the ability to operate in the future, as well as the assets and their owners. To avoid such risks, seek the assistance of experienced lawyers.

 

Legal Assistance from Lawrange

AA Lawrange has expertise in the field of cryptocurrency regulation and more than 10 years of experience in supporting international business. The team brings together specialists in law, finance, and taxation, allowing cryptocurrency projects to be assessed comprehensively.

 

We provide support at all stages of business formation and development – from choosing a suitable operating model and preparing documents to resolving ongoing legal, regulatory, and tax matters.

 

If you are planning to open a cryptocurrency company in the UK or are already operating in this market, contact AA Lawrange. Our specialists will help determine the applicable requirements, assess the risks, and select a legal solution taking into account the specifics of each client.

 

Conclusions

How can you legally work with cryptocurrency in the UK? This is an important question given the transitional period for the crypto sector in this jurisdiction. In 2026, businesses need to take into account the current FCA requirements and assess in advance the implications of the transition to the new FSMA regime. 

 

For individuals, this means that choosing FCA-authorised platforms and maintaining full transparency with the tax authorities is critical.

 

FAQ

Is cryptocurrency legal in the UK?

Yes. Owning and using cryptoassets in the UK is legal. At the same time, certain types of cryptocurrency activities are subject to regulation.

 

Is an FCA licence required for cryptocurrency trading?

For trading cryptoassets independently, FCA registration is generally not required. It is necessary if a company provides regulated cryptocurrency services.

 

Does a cryptocurrency company need to register with the FCA?

Yes, if the company provides services falling under the applicable MLRs. For example, cryptoasset exchange or custody services.

 

Can you open a cryptocurrency business in the UK?

A cryptocurrency business can be opened and operated in the UK, provided that the requirements of FCA, AML, and tax legislation are complied with.

 

Do you have to pay tax on cryptocurrency in the UK?

Yes, if taxable income or capital gains arise. The specific tax depends on the nature of the transactions and the taxpayer’s status.

 

Can a foreign cryptocurrency company work with clients from the UK?

A foreign cryptocurrency company may work with clients from the UK only if it has official registration or authorisation with the UK regulator, the FCA.

 

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