UK's crypto field expected to shrink as FCA opens registration gateway

The UK’s market regulator, the Financial Conduct Authority (FCA), has started to accept crypto authorization applications as of Wednesday, September 30, in line with earlier guidance detailing the country’s new regulatory regime.  

From the opening date, firms will have a five-month window to continue operating in the UK, after which, they will face a cutoff similar to how the MiCA regime shut out unlicensed businesses from Europe when the transition period expired on July 1.

When the Markets in Crypto-Assets Regulation’s (MiCAR) grace period ended, only 213 licensed entities cleared the bar, according to compliance firm Elliptic. As of September 28, CASP Tracker, which follows the official ESMA register, shows that of the world’s 100 largest exchanges by volume, only 16 held a MiCA license.

What does the FCA’s regulatory window mean for crypto firms?

Director of authorization at the FCA, Dominic Cashman, framed the gateway opening as a milestone because “Firms can now apply for authorisation and start preparing for regulation,” which gives the sector “clarity and legitimacy” and also offers consumers protections that did not exist before now. 

While UK crypto businesses now have a proper channel to align with FCA recommendations on consumer protection, safeguarding client assets, market integrity and financial resilience, the regulator was blunt that not every applicant will score passing grades. 

The FCA has a historical precedent of using its regulatory framework to thin out the field. Approvals were rare under the earlier version of the regulator’s money-laundering registration scheme. 

Only four got the all-clear from the FCA out of 35 applications in the year to March 2024. Fast forward to August 2026, and 263 of 391 completed cases ended in withdrawals, with only 17% ending as registrations.

Notably, the failure rate has eased significantly recently, with 13 of the 23 rulings over the last 12 months being registrations, a 56% approval rate. 

The registration timeline under the new UK crypto framework 

The registration gateway has opened as of this September 30 report, and will remain open until February 28, 2027, at 11:59 p.m. The wider Financial Services and Markets Act regime will start on October 25, 2027.

Firms that don’t send in their application within the five-month window that just opened will miss out on the exemption that allows full operation pending a ruling on their application. 

Firms that send their applications after the five-month window will face restrictions on signing new customers or selling new business to current ones. They will be limited to servicing existing contracts. 

Finally, those that do not apply will be cut off from the UK crypto market when the regime starts on October 25, 2027.

The UK regulator has also answered the question about whether past registrations carry over into the regime, clarifying that a Money Laundering Regulations registration does not roll over into full FSMA authorization. 

The regulator laid out the in-scope activities, from stablecoin issuance to trading platforms, custody and staking, in guidance published September 16, when it also confirmed the gateway date alongside a £500 million UK money-laundering crackdown, as Cryptopolitan reported.

Which big crypto platforms will be pushed out of the UK? 

Europe’s cutoff shows how a big name can still end up outside the perimeter. Binance, the largest exchange by volume, sits in CASP Tracker’s “not licensed” column. 

Cryptopolitan has previously reported that Binance missed the deadline to secure a European license, and AML Intelligence reported on September 28 that ECB President Christine Lagarde helped talk Greece out of granting the exchange a MiCA license earlier this year, keeping it out of the bloc for now even as it continues serving European users.

Whether the UK’s gateway narrows the field as sharply will depend on how many firms file credible applications before the February deadline, and how many decide the cost of full authorization is not worth staying.

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