Fintech, digital assets, payments and consumer credit | UK Regulatory Outlook February 2026

New cryptoassets regulatory regime expected for the UK in 2027 

The UK is moving towards a much broader regulatory regime for cryptoassets, in line with the "same risk, same regulatory outcome" principle, with the new regime expected to come into force on 25 October 2027. 

New regulations have now been published (4 February) that will amend existing legislation to define the categories of regulated cryptoassets and specify activities relating to these as regulated activities. The new regulated activities include issuing qualifying stablecoin, safeguarding cryptoassets, operating trading platforms, dealing in cryptoassets, and cryptoasset staking. This means firms will need to be authorised by the Financial Conduct Authority (FCA) or exempt to carry on these activities when the new regime commences. 

The application period for firms wishing to undertake the new cryptoasset regulated activities will be open from 30 September this year to 28 February 2027. There will be no automatic "conversion" to full FCA authorisation for cryptoasset firms currently registered under money laundering rules. 

The FCA has published a suite of webpages to help in-scope cryptoasset firms prepare for the new regime, covering topics such as the legislative framework, the regulator's minimum standards for firms and individuals, and the FCA's approach to authorisation, supervision and enforcement. 

A consultation is currently under way on the application of the FCA Handbook rules to regulated cryptoasset activities until 12 March. The FCA consultation will look at guidance on how the Consumer Duty will apply to cryptoasset firms; in accordance with the current proposals, cryptoasset distributors will be responsible for Consumer Duty compliance even where the manufacturer is unknown or unregulated.  

The new cryptoasset regulations also establish a new admissions and disclosures regime for public offers of qualifying cryptoassets and their admission to trading, together with a market abuse regime. 

The Office of Financial Sanctions Implementation (OFSI) has published a blog on its work with UK law enforcement agencies and regulators to tackle the abuse of cryptoassets for sanctions evasion, as part of a pilot multi-agency initiative called the Crypto Cash Fusion Cell. OFSI's message to the sector is a simple one: the use of cryptoassets to evade sanctions will be treated no differently to the exploitation of traditional currencies. 

FCA launches Mills Review into how AI will reshape retail financial services 

The FCA has launched the Mills Review assessing how advanced artificial intelligence (AI) may influence retail financial services in the years ahead. The review that was launched on 27 January is examining developments in generative, agentic and emerging forms of AI and is considering potential effects on consumers and competition and how UK retail financial markets operate.  

The FCA is inviting views on how AI could evolve in future, how these developments could affect markets and firms, the impact on consumers, and how regulators may need to evolve, with a deadline of 24 February 2026. 

Treasury Committee reports on AI in financial services 

The House of Commons Treasury Committee has published a report following its inquiry examining the opportunities and risks of artificial intelligence (AI) in financial services that focused on AI's impact on consumers and financial stability. 

The committee heard that AI offers important benefits, including faster services for consumers and new cyber defences for financial stability. However, the inquiry revealed significant risks to consumers and financial stability, which could reverse any potential gains. The committee concluded that the financial regulators are "not doing enough" to manage the risks presented by AI and, by taking a "wait-and-see" approach, the regulators are exposing consumers and the financial system to "potentially serious harm". 

Key recommendations include: 

• By the end of 2026, the FCA should publish guidance for firms on the application of existing consumer protection rules to use of AI, and on accountability and the level of assurance expected from senior managers under the Senior Managers and Certification Regime for harm caused through use of AI;
• To build firms' readiness for AI-driven market shocks, the Bank of England and the FCA should conduct AI-specific stress testing; and
• By the end of 2026, HM Treasury should designate the major AI and cloud providers as critical third parties for the purposes of the critical third parties regime.