VASP Registration in United Kingdom for Crypto Businesses: What You Need to Know in 2026

The UK doesn’t let crypto businesses operate without a license anymore. If your company sells crypto, runs a wallet service, or even just markets crypto products to people in the UK, you must register with the Financial Conduct Authority (FCA). This isn’t optional. It’s the law, and it’s been in force since September 1, 2023. Skipping this step means you can’t legally advertise, operate, or accept money from UK customers - even if your office is in another country.

Who Needs to Register?

It’s not just exchanges or mining farms. The FCA’s rules cover any business that does even one of these things:

• Advertises crypto services to UK residents (even on social media or Google Ads)
• Has a UK office or team managing crypto operations
• Runs a crypto ATM in the UK
• Accepts payments from UK customers as part of regular business
• Uses UK-based servers or payment processors to support crypto services

Here’s the catch: if you have UK customers but no physical presence, you might think you’re off the hook. Not true. The moment you start marketing to them - even once - the FCA says you’re doing business in the UK. A single Instagram ad targeting London users is enough to trigger registration.

On the flip side, if your website is in English but you don’t target the UK at all - no ads, no UK phone numbers, no GBP pricing - you probably don’t need to register. But if you’re unsure, assume you do. The FCA doesn’t care about your intentions. They care about your actions.

What Does the FCA Actually Check?

Registration isn’t just filling out a form. The FCA runs a full background check. They want to know:

• Who owns the company - and if they’ve ever been banned from finance
• Who’s running it day-to-day - and if they’ve got real experience
• How you verify customers (KYC) - and if your system actually works
• How you track suspicious transactions - and if you report them
• How you protect customer funds - and if they’re kept separate from your company’s money
• How you stop hackers - and if your cybersecurity plan is real

They don’t just ask. They test. You’ll need to show logs, screenshots, policies, and sometimes even do a live interview. One company got rejected because their KYC system flagged a high-risk user - but they never followed up. The FCA saw that as a red flag. If you don’t act on alerts, you don’t deserve a license.

The Travel Rule Isn’t Optional

Since September 2023, every crypto transfer over £1,000 between VASPs must include sender and receiver details. That’s the Travel Rule. It’s not a suggestion. It’s mandatory.

That means:

• If you send BTC to another exchange in the UK, you must include the sender’s name, ID number, and address
• If you receive crypto from a wallet outside the UK, you must still collect the originator’s info
• If you deal with unhosted wallets (like personal MetaMask addresses), you still need to verify who owns them

Most crypto platforms can’t do this manually. You need software that automatically pulls, stores, and sends this data. If you’re using a basic wallet API or a simple transfer tool, you’re not compliant. The FCA has fined multiple firms for failing to implement this. One firm paid £1.2 million in penalties just for not logging sender addresses.

The Application Process

You apply through the FCA’s Connect system. It’s not a website you can sign up for. You need to submit dozens of documents:

• Company registration papers
• Organizational chart showing reporting lines
• AML/CFT policy manual (minimum 30 pages)
• KYC procedures with sample checks
• Financial statements proving you have enough capital (usually £100k+)
• IT security audit reports
• CVs of all directors and senior managers

Then comes the Fit and Proper Test. The FCA interviews each key person. They ask about past regulatory breaches, criminal records, or even political donations. One CEO got rejected because he’d been fined for tax evasion five years ago - even though it was unrelated to crypto.

Processing time? It varies. Simple cases take 3-6 months. Complex ones? Over a year. The FCA doesn’t rush. They reject 40% of first-time applications. Most failures happen because applicants didn’t read the guidance properly. The FCA publishes clear rules. If you skip reading them, you’re setting yourself up to fail.

Why Do So Many Get Rejected?

Most rejections come down to three things:

1. Weak KYC systems - using basic ID checks without facial recognition or document verification
2. No transaction monitoring - not flagging unusual patterns like large, rapid transfers
3. Banking access - if your bank won’t support you, the FCA sees that as a red flag

Here’s the real problem: banks are scared. Many still refuse to open accounts for crypto firms. Even if you’re approved by the FCA, you might not find a bank to hold your money. That’s why some companies register in the UK but keep their banking in the EU or Asia. It’s risky, but it’s how some survive.

One firm in Manchester spent 14 months getting approved - then found their bank closed their account the day after approval. They had to scramble to find a new one. Don’t assume registration = operational freedom.

What Happens If You Don’t Register?

The FCA doesn’t just ignore you. They act.

• Your website gets blocked in the UK
• Your ads get pulled by Google and Meta
• Your UK customers can’t deposit or withdraw
• You can be fined up to £1 million or face criminal charges
• Directors can be banned from running any financial business in the UK

In 2024, the FCA shut down three unregistered crypto platforms. One was a US-based exchange that had 12,000 UK users. They didn’t even know they were breaking the law until their site went dark. Now, they’re stuck with legal bills and no way to serve their customers.

What’s Next?

The FCA isn’t done. They’re holding more info sessions in 2025 - including one in Edinburgh. They’re also tightening the Travel Rule. By mid-2026, they plan to require full identity verification for all transfers, not just those over £1,000. They’re also working with other countries to share data on bad actors.

If you’re thinking about expanding to the UK, don’t wait. The window for easy registration is closing. The rules are clearer now than ever. But they’re also stricter.

How to Prepare

Start here:

1. Read the FCA’s Guidance for Virtual Asset Service Providers - all 80 pages
2. Map out your KYC and transaction monitoring tools - make sure they’re not just checkboxes
3. Get your financial statements audited - show real, clean books
4. Prepare your directors for interviews - they’ll be asked tough questions
5. Start talking to banks - even if they say no now, keep trying

Don’t try to do this alone. Many firms hire consultants who specialize in UK crypto regulation. It’s expensive, but cheaper than getting fined or shut down.