Crypto & Digital Assets APPG Writes to HM Treasury and FCA on Transitional Arrangements and Regulatory Readiness
The Crypto and Digital Assets All-Party Parliamentary Group (APPG), supported by CryptoUK as secretariat, recently wrote to HM Treasury and the Financial Conduct Authority (FCA) regarding the potential use of transitional arrangements ahead of the UK’s new cryptoasset regulatory regime, as well as the readiness of UK regulators to properly administer the regime.
The letter, sent by APPG Co-Chairs Gurinder Singh Josan MP and Lord Vaizey of Didcot, followed extensive engagement by the APPG with industry and comes as the UK prepares for the regime to go live on 25 October 2027, with the FCA’s authorisation gateway opening in September 2026.
The APPG said it had heard strong support from industry for the Government’s ambition to position the UK as a global hub for digital assets. However, it also flagged consistent concerns about the scale and pace of transition into the new regime and the increased requirements upon UK firms.
The APPG said that under the new regime firms will need to move from the current AML framework to full FCA authorisation, meeting significantly higher standards across governance, financial resilience, risk management, safeguarding, and consumer protection. The APPG said that for many firms, this will require substantial operational and financial changes within a relatively short timeframe, including investment in systems, capital planning, and compliance capability.
Reflecting these concerns, the APPG Co-Chairs asked whether transitional or phased implementation measures could support a smoother transition:
“We would be grateful to understand whether consideration has been given to the potential benefits of transitional arrangements or a phased implementation of certain elements of the regime… We would also welcome your perspective on regulatory readiness as the commencement date approaches, including whether the FCA anticipates any additional capacity or specialist expertise will be required to process applications and supervise the regime effectively from day one.”
The APPG also pointed to precedents such as the EU’s MiCA framework and the UK’s implementation of FSMA 2000, where transitional measures were used to support firms without lowering regulatory standards.
HM Treasury: Timeline “Strikes the Right Balance”
In its response to the APPG, HM Treasury said it remains committed to making the UK a “world-leading destination for digital assets” and highlighted that the implementation period has been designed to give firms time to prepare, manage compliance costs, and transition into full authorisation.
The Treasury said the FCA is expected to finalise its rules by mid-2026, with the authorisation gateway opening on 30 September 2026, giving firms over a year to secure authorisation before the regime goes live in October 2027. It said this timetable “strikes the right balance” between pace and allowing firms sufficient time to adjust.
On readiness, the Treasury said the FCA is supporting firms through measures such as pre-application meetings, early guidance, and resource prioritisation, alongside increasing its regulatory and technical expertise.
FCA: Transitional Measures Under Consideration, Readiness Ongoing
In its response to the APPG, the FCA said it is working to deliver a comprehensive, proportionate and internationally competitive regulatory framework, while recognising that moving to a full FSMA-based regime will require significant operational and organisational effort from many firms.
On transitional arrangements, the FCA said it is giving careful consideration to how firms are supported in moving into the new framework. This includes exploring potential transitional measures for areas such as cryptoasset disclosures and admissions processes, drawing on lessons from previous UK and international regulatory transitions, and assessing the costs and benefits of different approaches.
On regulatory readiness, the FCA said it is actively preparing for both the authorisation and supervision of firms under the new regime. This includes planning for the expected volume and complexity of applications, building specialist capability, and establishing the supervisory resources needed to operate the regime effectively from day one. The FCA said its resourcing and capability requirements remain under ongoing review as implementation approaches.
The FCA also said it continues to engage closely with industry to support firms’ preparation. This includes running information sessions, engaging proactively with prospective applicants, and launching its Pre-Application Support Service (PASS), which will give firms the opportunity to discuss their business models and better understand the authorisation process ahead of applying.
The APPG’s Work:
The APPG will continue to work closely with industry, Government and regulators to help ensure that the UK’s new cryptoasset regime works for both industry and consumers.
The Crypto and Digital Assets All-Party Parliamentary Group (APPG) provides an essential forum for parliamentarians, regulators, government, and industry to come together and discuss the key challenges and opportunities facing the UK’s crypto and digital assets sector.
To find out more about the APPG or to get involved, please get in touch via the contact form on the APPG page.
