FCA Crypto Authorization Eligibility Checker
FCA Crypto Authorization Eligibility Checker
This tool helps you determine if your crypto exchange needs FCA authorization based on your business model. Answer the questions below to find out your requirements.
Step 1: Where is your business located?
Step 2: What services do you offer?
Step 3: Who are your customers?
Step 4: Do you issue stablecoins from within the UK?
Your FCA Authorization Requirements
Running a crypto exchange that serves UK customers? You’ve probably heard the term FCA crypto authorization tossed around, but what does it really mean for your business? The UK regulator has two overlapping regimes - a current money‑laundering registration and a soon‑to‑kick‑in FSMA authorization. This guide walks you through every step, from the paperwork you need today to the compliance checklist you’ll need when the new rules land.
Who’s in charge? Understanding the Financial Conduct Authority the UK regulator that supervises financial services, including crypto‑related activities
The FCA is the body that decides whether a crypto‑exchange can legally operate with UK users. It started policing crypto in 2020, first by forcing firms to register under anti‑money‑laundering rules. Next year, the FCA will add a full‑blown authorization under the Financial Services and Markets Act 2000 the primary legislation that gives the FCA power to grant licences for regulated activities. Missing either step means you could be shut down, fined, or forced to stop serving UK consumers.
Current baseline: Registering under the Money Laundering Regulations UK rules that require crypto firms to prove they can prevent money‑laundering and terrorist financing
Every cryptoexchange that lets users trade or hold assets must file a registration with the FCA. The process is fairly straightforward, but the FCA expects concrete evidence that you’ve built a solid AML framework.
- Prepare a risk‑assessment covering the types of crypto you support, the jurisdictions of your users, and the size of the transactions.
- Document customer‑due‑diligence (CDD) policies - know‑your‑customer (KYC) checks, source‑of‑funds verification, and ongoing monitoring.
- Adopt the guidance from the Joint Money Laundering Steering Group a committee that produces sector‑specific AML best‑practice for crypto businesses. Their “PartII, Chapter22” checklist is the de‑facto standard.
- Submit the registration via the FCA’s online portal. The outcome can be approval, rejection, withdrawal, or refusal - most firms see approval if they can prove a clean AML system.
Remember: registration is a gateway, not a full licence. It does not cover activities such as dealing as a principal, arranging deals, or safeguarding client assets.
Future landscape: Authorization under FSMA the law that will require crypto firms to obtain a formal licence for certain activities
When the FCA rolls out the FSMA regime, eight core activities will need a licence. If you plan to run a trading platform, act as a market maker, or offer custodial services, you’ll fall into one of these categories:
- Operating a Qualifying Cryptoasset Trading Platform a regulated exchange where users can buy, sell or swap cryptoassets
- Dealing in qualifying cryptoassets as a principal
- Dealing in qualifying cryptoassets as an agent
- Arranging deals in qualifying cryptoassets
- Safeguarding qualifying cryptoassets and specified investment cryptoassets
- Providing qualifying cryptoasset staking services
- Issuing qualifying stablecoins
Each activity triggers a separate licence application, complete with capital requirements, governance standards, and a set of “Threshold Conditions” that mirror those for traditional banks.
Territorial reach - when overseas firms need UK permission
If your exchange is based in Malta, Estonia, or any other jurisdiction, you still need FCA approval when you serve UK retail users. The rule is simple: any firm that directly or indirectly offers a Qualifying Cryptoasset Trading Platform to UK consumers must be authorised. There is an exception, however, when you work through a UK‑authorised intermediary - the FCA wants to avoid an “infinite chain” of licences.
Institutional‑only services (hedge funds, private equity, etc.) are exempt, as long as the customers are not acting as a bridge to retail investors. Stablecoin issuers face a stricter physical‑presence test: only firms that issue a qualifying stablecoin from within the UK need a licence. This nuance is crucial for projects that want a global launch but want to avoid a UK‑specific licence.
Key differences: Registration vs. FSMA Authorization
| Aspect | MLR Registration (Current) | FSMA Authorisation (Future) |
|---|---|---|
| Legal basis | Money Laundering Regulations 2017 | Financial Services and Markets Act 2000 |
| Core activities covered | Cryptoexchange and custodian wallet services (AML only) | Trading platform, dealing, arranging, safeguarding, staking, stablecoin issuance |
| Territorial scope | UK‑based firms; overseas firms need only AML registration | Any firm serving UK retail customers, regardless of location |
| Capital & prudential requirements | None specific to crypto | Minimum capital, liquidity buffers, governance standards |
| Supervision intensity | Annual AML reporting, occasional inspections | Ongoing compliance reporting, on‑site inspections, CASS audits for custodians |
| Timeline | Immediate - registration opens 2020 | Phased rollout starting 2026 (consultation still open) |
Practical checklist for exchanges preparing now
- Confirm you’re registered under the Money Laundering Regulations. If not, submit your application today.
- Map every service you offer to the eight FSMA‑regulated activities. Identify which ones will need a licence.
- Build a compliance framework that satisfies both AML and the upcoming “Threshold Conditions”. Include:
- Risk‑based AML policies (JMLSG reference)
- Customer onboarding flow that captures source‑of‑funds
- Governance documents (board charter, senior management function)
- Capital adequacy calculations if you plan to trade as principal
- Engage with the FCA early. Pre‑application meetings are free and can highlight gaps before you file.
- If you’re an overseas platform, decide whether to partner with a UK‑authorised intermediary or apply for full authorisation.
- For stablecoin projects, verify whether you’ll issue the token from a UK entity. If not, you may avoid the licence but must still meet AML checks.
Common pitfalls and how to avoid them
Pitfall 1: Treating registration as a “set‑and‑forget” step. The FCA can revoke registration if AML controls slip. Keep your policies up to date and run quarterly self‑assessments.
Pitfall 2: Ignoring the territorial test. Some firms think a UK‑based marketing partner shields them; the FCA still expects the operating entity to be authorised.
Pitfall 3: Under‑estimating capital. Even a modest staking service may need several hundred thousand pounds in liquid assets under the new rules.
Pitfall 4: Overlooking the CASS audit for custodians. The audit checks segregation of client assets, insurance coverage, and technical safeguards. Plan for an external audit early.
Next steps - what to do this week
- Check your firm’s registration status on the FCA register (search by firm name).
- Draft a simple matrix linking each product feature to the relevant FSMA activity.
- Schedule a 30‑minute call with the FCA’s Crypto‑Assets team - they’ll tell you whether a pre‑application meeting is needed.
- Begin drafting a capital‑adequacy model if you intend to act as a principal dealer.
Frequently Asked Questions
Do I need FCA authorisation if I only hold crypto for users?
If the service is a custodial wallet, you must at least register under the Money Laundering Regulations. Once the FSMA regime begins, custodial services will fall under the “safeguarding” activity and will require a full licence.
Can an overseas exchange avoid FCA authorisation by using a UK partner?
Yes, if the UK partner holds the FCA licence and the overseas firm operates only through that intermediary. The FCA explicitly allows this to prevent an endless chain of licences.
What documentation does the FCA expect for a trading‑platform licence?
The FCA wants a business plan, risk‑assessment, AML/CTF policies (aligned with JMLSG), governance charter, capital calculations, IT security framework, and a description of how you’ll segregate client assets (CASS audit plan). A draft of each document should be ready before you submit.
When will the FSMA crypto authorisation regime become effective?
The FCA has said the rollout will start in 2026, with a phased approach and additional consultation papers expected throughout 2025.
Do stablecoin issuers need a UK licence if they issue from abroad?
Only if the issuance activity takes place in the UK. Foreign‑issued stablecoins can be listed on UK platforms, but the platform itself must be authorised.
Steve Cabe
September 29, 2025 AT 00:14 AMThe FCA's crypto playbook is a classic case of regulatory overreach that threatens the innovative spirit of any free market. While the UK tries to police digital assets, American firms should stay vigilant and prepare their own compliance frameworks rather than rely on foreign approvals. A precise AML registration is the minimum, but the looming FSMA licence will demand capital and governance standards that most startups simply cannot meet without diluting shareholder value.
shirley morales
September 30, 2025 AT 04:00 AMThe FCA's new regime is nothing short of absurd it betrays the very principles of financial freedom and innovation we must reject such parochial shackles.
Mandy Hawks
October 1, 2025 AT 07:47 AMOne might wonder whether the pursuit of regulatory certainty actually stifles the very curiosity that drives technological progress. The FCA's bifurcated approach-registration now, full authorisation later-creates a temporal tension that could leave firms in a perpetual state of limbo. Yet, from a philosophical standpoint, the attempt to impose order on a borderless digital ecosystem is understandable. Perhaps the lesson lies in balancing prudence with openness, accepting that some uncertainty is intrinsic to innovation.
Scott G
October 2, 2025 AT 11:34 AMIt is indeed commendable that the guidance delineates clear steps for compliance. Firms that adopt a proactive stance will likely find the transition smoother. Thank you for highlighting the importance of early engagement with the regulator.
VEL MURUGAN
October 3, 2025 AT 15:20 PMFrom an analytical perspective, the distinction between registration and full authorisation is analogous to a two‑stage filter. The first stage captures basic AML integrity, while the second imposes a capital‑and‑governance sieve. Firms that underestimate the depth of the second stage risk costly re‑applications later. A friendly reminder: map every activity now, because retro‑fitting compliance is far more taxing.
Russel Sayson
October 4, 2025 AT 19:07 PMNavigating the FCA's upcoming FSMA authorization is akin to charting a course through a dense fog; the regulatory lighthouse flickers but does not give you a clear bearing.
First, you must map every service your platform offers against the eight prescribed activities, because a single mis‑classification can trigger a full‑blown licence demand.
Second, construct a robust AML framework that not only satisfies current Money Laundering Regulations but also anticipates the stricter Threshold Conditions.
Third, assemble a capital adequacy model that reflects both principal trading and custodial responsibilities, remembering that the FCA will scrutinize liquidity buffers with the rigor reserved for traditional banks.
Fourth, draft governance charters that delineate senior management functions, risk committees, and board oversight, because the regulator expects a clear chain of accountability.
Fifth, develop a comprehensive IT security blueprint that covers segmentation, encryption, and incident response, as cyber‑risk assessments will be a non‑negotiable part of the application.
Sixth, prepare a detailed CASS audit plan for custodial services, outlining asset segregation, insurance coverage, and third‑party verification processes.
Seventh, engage early with the FCA’s Crypto‑Assets team; pre‑application meetings are free and can surface hidden gaps before you invest in the full submission.
Eighth, consider whether partnering with a UK‑authorised intermediary could offload some licencing burdens, but weigh this against the loss of operational control.
Ninth, keep an eye on the evolving consultation papers throughout 2025, because the FCA often refines capital thresholds and risk‑weighting formulas based on industry feedback.
Tenth, maintain a living compliance register that logs policy updates, audit findings, and regulatory communications, ensuring you can demonstrate ongoing adherence.
Eleventh, allocate budget for external legal and audit counsel; the cost of a well‑prepared application is dwarfed by the penalties of a rejected one.
Twelfth, train your staff on the nuances of the new regime, emphasizing that the cultural shift from “registration” to “authorisation” demands heightened diligence.
Thirteenth, document your territorial reach meticulously, especially if you serve UK retail customers from offshore, because the FCA’s “infinite chain” test can catch unwary firms.
Fourteenth, model stress scenarios for capital adequacy under adverse market conditions, as the FCA will likely conduct on‑site inspections to validate your projections.
Finally, remember that the rollout is slated for 2026, giving you ample time to execute this roadmap-provided you start today rather than procrastinating until the deadline looms.
Shane Lunan
October 5, 2025 AT 22:54 PMMeh, whatever.
Kyla MacLaren
October 7, 2025 AT 02:40 AMi think its good sounf like we can all puhs forward together.
Linda Campbell
October 8, 2025 AT 06:27 AMIt is incumbent upon us, as custodians of financial integrity, to confront the FCA's overreaching mandates with unwavering moral conviction. The attempt to impose a foreign jurisdiction's zeal upon an ostensibly sovereign market betrays the very principles of self‑determination we hold dear. Consequently, one must denounce such regulatory imperialism and champion a framework that respects both innovation and national sovereignty.
John Beaver
October 21, 2025 AT 00:00 AMHey, dont forget to double‑check your KYC flow – a tiny slip can cost you a big fine.
EDMOND FAILL
November 2, 2025 AT 17:34 PMJust a heads‑up – the FCA rollout looks slower than a Sunday morning, so you’ve got some breathing room.