Cryptoasset Regulation Coming to the United Kingdom: What You Need to Know

Date: 30 April 2026

UK Asset Management and Investment Funds Alert

By: Kai Zhang, Judith Rinearson, Andrew J. Massey

Cryptoassets, including cryptocurrencies and other digital assets, are a global phenomenon, and they are attracting increasing regulatory attention in many jurisdictions. In keeping with this trend, the United Kingdom is finalising its regime to regulate cryptoasset businesses that are not currently within its regulatory perimeter. Those cryptoasset businesses will be brought within the UK “regulated activities regime” alongside traditional financial services businesses (such as investment banks, brokerage firms and asset managers) and distinct from the regulation of payment services and electronic money.

From 25 October 2027, in-scope cryptoasset businesses must obtain prior authorisation from the UK Financial Conduct Authority (FCA) in order to do business in the United Kingdom or provide services to certain customers in the United Kingdom. Obtaining “FCA authorisation” means those businesses will need to be licenced by the FCA, and they will be subject to regulation and supervision by the FCA in respect of their UK activities. The legislation setting out the overall framework has been finalised, but the FCA’s detailed firm-facing rules are not yet finalised. The main FCA consultation papers on these rules can be found at “Key publications” on a dedicated FCA webpage HERE.

The new UK cryptoasset regime will have a significant impact on existing cryptoasset businesses, including those that have customers in the United Kingdom, even if the business operates outside the United Kingdom and has no other UK connection or presence.

Key Takeaways

What Cryptoasset Activities Will Be Regulated?

The following cryptoasset activities will become “regulated activities” in the United Kingdom, meaning that a person carrying on such activities will generally (i.e. subject to exclusions/exemptions) need to be licensed and regulated by the FCA:

Issuing stablecoin
Safeguarding (i.e. custody) of cryptoassets
Operating a cryptoasset trading platform
Cryptoasset staking
Dealing in cryptoassets as principal
Dealing in cryptoassets as agent
Arranging deals in cryptoassets

The FCA refers to the last three regulated activities collectively as “cryptoasset intermediation,” and firms undertaking one or more of these activities as “cryptoasset intermediaries.”

Note: Whilst there is no separate regulated activity in relation to advising on cryptoassets or managing cryptoassets, this does not necessarily mean that these activities are outside the UK regulatory perimeter. Instead, advising on or managing cryptoassets will be within the existing UK regulatory perimeter where the cryptoasset in question meets the definition of a type of “specified investment” in the legislation, e.g. a tokenised equity or debt security. In addition, a business that is not required to be FCA authorised may be subject to FCA requirements in certain circumstances under the “designated activities regime.”

Who Will Be Affected?

The territorial scope of the new regulated cryptoasset activities is prescribed in legislation, and this is different in some respects to the territorial scope of other regulated activities. In summary, the position is as follows:

Firms based in the United Kingdom that undertake regulated cryptoasset activities are potentially in-scope regardless of where their customers are located.
Non-UK overseas firms with no physical presence in the United Kingdom but providing the relevant services to consumers located in the United Kingdom are potentially in-scope. There is no specific “reverse solicitation” exemption.

Note: Overseas cryptoasset firms whose operations have UK elements will need to assess if they could fall within scope, particularly where they service consumers in the United Kingdom. There may also be some impact for traditional businesses whose activities involve cryptoassets (e.g. firms providing custody services for tokenised securities that are within scope of the new cryptoassets regime) given the different rules on territoriality for cryptoassets.

What Is the Timing?

The new regime will come into force on 25 October 2027. This means cryptoasset businesses must be authorised by the FCA by this date in order to carry on the regulated cryptoasset activities in the United Kingdom or with relevant UK customers unless the firm is able to rely on an exclusion/exemption or is within the transitional arrangements.

Note: Preparing an FCA authorisation application is a significant undertaking that for most businesses will require considerable time and resources; it will also take the FCA time to process such applications. In-scope businesses are therefore advised to start this process as soon as possible. Transitional arrangements may be available for existing cryptoasset firms that have submitted an authorisation application to the FCA before 25 October 2027 that is yet to be processed/determined. If a firm does nothing before this date, then it will have to stop operating in the United Kingdom or with relevant UK customers no later than 25 October 2027.

Consistency With the EU Regulatory Regime?

The European Union’s Markets in Crypto-Assets Regulation (MiCAR) introduced a comprehensive regulatory framework for cryptoassets in the European Union, which has been fully effective since 30 December 2024. However, the United Kingdom is not simply replicating MiCAR; the work of international bodies such as the Financial Stability Board and International Organisation of Securities Commissions has helped establish some key principles for the regulation of cryptoassets that have been adopted by both the European Union in MiCAR and the forthcoming UK regime. That said, there are differences in scope, and there are expected to be differences in the detailed regulatory requirements. It will be critically important to understand the position in each jurisdiction where a cryptoasset business operates or has customers.

Note: If your business complies with MiCAR, do not assume that what is in place will be sufficient to comply with the UK regulatory regime.

Main Aspects of the New Cryptoassets Regime

Territorial Scope

The new UK cryptoasset regime will apply to regulated cryptoasset activities carried on in the United Kingdom or provided to persons in the United Kingdom. Consequently, non-UK businesses that operate on a cross-border basis into the United Kingdom will be caught in certain circumstances even if they do not have any physical presence in the United Kingdom.

The UK Financial Services and Markets Act 2000 prescribes certain circumstances where a person is deemed to be carrying on a regulated activity in the United Kingdom even if they are not physically present in the United Kingdom. That legislation has been amended to include the following additional “deemed in the UK” circumstances for regulated cryptoasset activities:

Where a person is involved in the sale or subscription of a cryptoasset to or by a consumer in the United Kingdom and that person is carrying on a regulated cryptoasset activity in circumstances that do not involve an FCA-authorised cryptoasset intermediary in relation to the sale or subscription.
Where a person is carrying on the regulated activity of safeguarding cryptoassets on behalf of a consumer in the United Kingdom and is not acting at the direction of an FCA-authorised firm to carry on that regulated activity.
Where a person is carrying on the regulated activity of cryptoassets staking on behalf of a consumer in the United Kingdom and is not acting at the direction of an FCA-authorised firm to carry on that regulated activity.

A “consumer” in this context means an individual in the United Kingdom who is acting for a purpose other than for any trade, business or profession carried on by that individual.

The chart below indicates how an overseas cryptoasset firm may be caught. Note that the chart is a simplified summary of complex requirements and is for illustration only. The specific analysis will depend on the particular facts and circumstances.

Cryptoassets That Are Within Scope

The UK regime defines a cryptoasset as “any cryptographically secured digital representation of value or contractual rights that (a) can be transferred, stored or traded electronically and (b) uses technology supporting the recording storage of data (which may include distributed ledger technology).”

Whether a particular cryptoasset is subject to the UK regulatory regime depends on whether it falls within any of the following categories:

Regulatory Category	Definition	Relevant Regulated Activity
Qualifying Cryptoasset	A cryptoasset that is fungible, transferable and not solely a record of value or contractual rights. This includes “qualifying stablecoins,” but it excludes “specified investment cryptoassets” and other instruments that are already regulated (such as electronic money).	Cryptoasset intermediation activities (see above) Operating a cryptoasset trading platform Safeguarding of cryptoassets Cryptoassets staking
Qualifying Stablecoin	A “qualifying cryptoasset” that seeks or purports to maintain a stable value in relation to a particular fiat currency where assets (either the referenced fiat currency or other assets) are held for the purpose of maintaining a stable value.	Issuing stablecoin
Specified Investment Cryptoasset	A cryptoasset that is a “specified investment” and meets the criteria to be a “qualifying cryptoasset.” * A “specified investment” is a defined term under the UK regulated activities regime and refers to any type of investment specified in legislation that is subject to regulation (essentially financial instruments such as equity or debt security).	Relevant existing regulated activities (e.g. advising on investments, managing investments) See below regarding those that are “relevant specified investment cryptoassets.”
Relevant Specified Investment Cryptoasset	A “specified investment cryptoasset” that is within the definition of the following: “specified investments,” “security” (such as equities) or “contractually based investment” (such as derivatives). It covers tokenised versions of these instruments, such as tokenised equities.	Safeguarding of cryptoassets

The following chart indicates the overlapping nature of the regulatory cryptoasset definitions discussed above.

FCA Authorisation

Who Needs to Be FCA Authorised?

If a firm is carrying on any of the new regulated cryptoasset activities (listed above and discussed further below) by way of business in the United Kingdom or with relevant UK customers, and no exclusion/exemption is available, the firm must obtain prior authorisation from the FCA for the specific activities it wishes to carry on, whether or not they are already authorised by or registered with the FCA for other activities. Being FCA authorised means the firm will be licensed and subject to regulation and supervision by the FCA.

This is expected to impact existing businesses as follows:

For existing cryptoasset firms that are currently required to be registered with the FCA under the UK anti-money laundering (AML) requirements, they will need to consider whether they are within the scope of the new regime and accordingly whether they need to apply to be authorised and regulated by the FCA.
For existing FCA-authorised traditional financial services (e.g. investment firms), they will need to consider whether they are brought within scope of the new regime. This might be the case if, for example: (i) they are carrying on or begin to carry on one or more of the regulated cryptoasset activities, or (ii) they undertake safeguarding (custody) activities for tokenised traditional asset classes.

Businesses based outside the United Kingdom that need to be authorised by the FCA will need to establish a UK presence. That might involve establishing a UK subsidiary or a UK branch (for overseas cryptoasset platforms that fall within scope, that might involve establishing both a UK subsidiary and a UK branch). The FCA is consulting on these options.

Carrying on a regulated activity in the United Kingdom without the requisite authorisation is a criminal offence which may result in imprisonment and/or unlimited fines. In addition, certain of the exemptions from the new prohibition on public offers of cryptoassets in the United Kingdom are dependent on the involvement of an appropriately FCA-authorised cryptoasset firm (discussed further below).

What Do the Regulated Cryptoasset Activities Entail?

Further details of the new regulated cryptoasset activities and associated requirements are set out below. Note that there are exclusions/exemptions from the regulated activities (not discussed in this article) which may be available depending on the facts and circumstances.

Issuing Stablecoin

“Issuing” has a specific meaning in this context. A person “issues” a qualifying stablecoin if: (i) the stablecoin was created by/for itself or a group affiliate, (ii) it offers or arranges for another to offer the stablecoin for sale or subscription (offering), (iii) it undertakes or arranges for another to undertake to redeem the stablecoin (redeeming), and (iv) it holds or arranges for another to hold the backing assets for stabilisation purpose (stabilising). If the person assumes (under whatever mechanism, including contract and operation of law) an undertaking to redeem the stablecoin, the person is deemed to be carrying on offering and stabilising, and the stablecoin is also deemed to be created by/for it. That is, it will be “issuing.”
The key requirements are for “backing assets”–i.e. those that are used to stabilise (back) the stablecoin. The backing assets must be segregated from the issuer’s own assets and held on trust for all coin-holders. If the issuer issues more than one stablecoin, each stablecoin must have its own separate backing assets pool. The value of the backing assets must always be equivalent to the value of the stablecoin in issuance. For stablecoins that have been redeemed, the issuer must either re-back them or burn them within 24 hours.
Backing assets are divided into two buckets – core backing assets and expanded backing assets. Core backing assets can only be on-demand cash deposits and short-term government debts (with a year or less maturity). Expanded backing assets can include long-term government debts (with over a year maturity) and certain money market funds.
By default, an issuer can only hold core backing assets. If it wishes to hold expanded backing assets, the issuer must get prior approval from the FCA and must comply with additional requirements on the composition of its backing asset pool.

The regulatory meaning of “issuing” does not necessarily track the concept currently understood in the market. For firms involved in the stablecoin redemption process, careful analysis would be needed to avoid being inadvertently regarded as “issuing” the stablecoin. Firms that deal with qualifying stablecoin but that are not “issuing” may need to consider if they could be within other regulated cryptoasset activities (e.g. one of the cryptoasset intermediation activities).

Safeguarding of Cryptoassets

“Safeguarding” here means having control that would enable a person to transfer the cryptoasset to another, including itself. That is, if a person has such control over another’s cryptoassets, the person will be carrying on this regulated activity. Arranging for someone else to have such control is also within this regulated activity.
The requirements are largely based on the current client assets rules for traditional financial services. These include segregation of client cryptoassets from the business’s own cryptoassets, holding of client cryptoassets on trust, disclosure of safeguarding controls, and conditions to be met where delegating to a sub-custodian.

This activity extends to “relevant specified investment cryptoassets” (discussed above). Relevant specified investment cryptoassets, such as tokenised shares, are expressly carved out of the current regulated activity of safeguarding and administration of assets. This means custodians currently providing custody services for tokenised instruments on the basis of their existing FCA permission for safeguarding and administration of assets will need to consider whether they have to vary their FCA permissions to add this new regulated cryptoasset activity or whether an exemption is available.

Operating a Cryptoasset Trading Platform

A “qualifying cryptoasset trading platform” (CATP) means, in summary, a system which brings together multiple third parties buying and selling interests in qualifying cryptoassets in a way that results in a contract for the exchange of such assets for money or other qualifying cryptoassets. A firm operating a CATP will be carrying on this regulated activity.
A CATP can only offer nondiscretionary trading protocols and, accordingly, will not have to provide best execution. Large CATPs (i.e. with annual revenue of over £10 million) must publish (e.g. on their websites) certain pre-trade information, such as the best 5 bids and best 5 offers for each cryptoasset pair, along with the volume. All CATPs, regardless of size, must publish required post-trade information.
A CATP must have in place adequate arrangements for personal account dealing (i.e. dealings by its employees or connected individuals) to manage conflicts of interest. Where a CATP has incentive schemes or arrangements with market makers or other liquidity providers, it must disclose these schemes and relationships, including their terms.

Cryptoasset Staking

“Staking” refers to using qualifying cryptoassets in blockchain validation. Blockchain validation means the validation of transactions on a blockchain or network using distributed ledger technology or similar technology, and it includes proof of stake consensus mechanisms.
Cryptoasset staking firms will be required to comply with specific safeguarding requirements (although they will not need to apply for separate permission for the specific safeguarding activity–see “Safeguarding of cryptoassets” above).
The FCA expects that non-UK overseas staking firms will need to have a UK subsidiary in order to apply for authorisation. This is said to be assessed on a case-by-case basis, so it is possible another form of UK presence (e.g. branch) may be possible. This is to be consulted on.
Staking firms must also make required pre-contractual disclosures and obtain express prior consent from customers who are consumers (see “Cryptoasset intermediation activities” below).

Cryptoasset Intermediation Activities
(i.e. dealing in cryptoassets as principal or as agent, and arranging deals in cryptoassets)

“Dealing” here covers buying, selling, subscribing for or underwriting (as principal or agent) a qualifying cryptoasset.
“Arranging” covers either of: (i) arranging for another (as principal or agent) to buy, sell, subscribe for or underwrite a qualifying cryptoasset; and (ii) making arrangements with view to participants in the arrangements entering into these transactions (buying, selling, etc.).
One key requirement for these activities is that if a cryptoasset intermediary wishes to service consumers, the cryptoasset in question must be admitted onto at least one UK-authorised CATP. The only exception is for UK-issued qualifying stablecoin, which does not have to be admitted on an authorised CATP to be accessible to consumers. This means that the cryptoasset intermediary’s business model would depend on factors outside its control unless the intermediary also operates a CATP.
Cryptoasset intermediaries will also be required to provide best execution (except when dealing with certain institutional counterparties); this includes checking the prices across at least 3 UK-authorised CATPs. In addition, orders for UK consumers must be ultimately executed only on UK-authorised execution venues. Large intermediaries dealing as principal (i.e. with annual revenue of £10 million or more) must publish pre-trade information, such as firm quotes to clients (subject to certain exemptions). All cryptoasset intermediaries, regardless of size, that deal as principal must publish required post-trade information.
On cryptoasset lending and borrowing, if these services are offered to consumers, enhanced conduct rules apply. These include providing required pre-contractual disclosures, obtaining the consumer’s express consent to the key terms and assessing the appropriateness of the services for the consumer. Firms cannot use their own proprietary tokens for these services unless the token is a UK-issued qualifying stablecoin.

What Requirements Must Be Complied With Once Authorised?

An FCA-authorised cryptoasset firm must comply with various requirements, including maintaining financial and nonfinancial resources, as well as conduct of business requirements. We set out below some of the main requirements as currently understood. As mentioned, the FCA is still to finalise the rules.

Regulatory Capital Requirements

This is the amount of cash (and other permitted assets) that must be maintained at all times. This must be the highest of the following three components:

Permanent minimum requirement (PMR)
- PMR is a prescribed amount specific to each regulated cryptoasset activity. For example, PMR is £75,000 for arranging deals in cryptoassets, £350,000 for issuing stablecoin and £750,000 for dealing in cryptoassets as principal.
Fixed overhead requirement (FOR)
- FOR is an amount equal to one quarter of a firm’s expenditure in the previous year.
K-factor requirement (KFR)
- KFR is an amount calculated monthly pursuant to prescribed methodologies. The K-factor for each regulated cryptoasset activity varies–for example, the K-factor for stablecoin is 2% of the average qualifying stablecoin in issuance. Note the total KFR is the sum of each individual activity-specific KFR.

Overall Risk Assesment Requirements

These requirements include:

Identification, monitoring and mitigation of risks that may cause material harm.
Calculation of the capital requirement and liquid asset requirement.
Business model planning and forecasting, stress testing, recovery and wind-down planning.
Assessment of the adequacy of financial resources.

All authorised cryptoasset firms must review their overall risk assessment at least annually or immediately following any material change.

Liquidity Requirements

These set out the form and amount of liquid assets that must be held.

Basic liquid assets requirement (BLAR)–applicable to all authorised cryptoasset firms
- BLAR equals to one-third of a firm’s fixed overheads requirement (see FOR above). This must be in the form of:
  - On-demand deposits at a UK bank.
  - Assets issued/guaranteed by the UK government or the Bank of England.
  - Certain permitted money market funds.
Issuer liquid assets requirement (ILAR)–applicable only to stablecoin issuers
- ILAR is the amount of cash a stablecoin issuer must hold in the backing asset pool (see “Issuing stablecoin” above).

This must be in the form of on-demand deposits at a UK bank.

Disclosure Requirements

Authorised cryptoasset firms must publicly (e.g. on their websites) disclose required information, including information on:

Risk management
Regulatory capital (how much it must hold and what assets are used to meet the requirements)
Group arrangements

Where a firm deals in cryptoassets as principal, the firm must also disclose the required financial information relating to its ultimate parent undertaking (e.g. balance sheet).

Other Applicable Requirements

Requirements under the FCA Handbook (which contains detailed rules for FCA-authorised firms)

The FCA’s Principles for Business, including the Consumer Duty.
- These overarching Principles set out the overarching standards, in broad language, for UK-authorised firms, such as conducting business with integrity and being open and cooperative with the regulators. The Consumer Duty is one of these Principles requiring authorised firms to deliver good outcomes to consumers.
The Senior Managers and Certification Regime (SMCR).
- SMCR imposes personal liabilities on relevant individuals of a UK-authorised firm, such as the chief executive officer, board directors and other senior officers.
Conduct of business requirements.
- The FCA is to further consult on how the conduct of business requirements, including ESG-related requirements and client categorisation, apply to authorised cryptoasset firms.

Other aspects of financial services laws and regulations

Various other requirements will apply to an authorised cryptoasset firm as a consequence of being authorised and supervised by the FCA. These include requirements on, e.g. financial promotion, AML and change in control.
See also Section C below.

Additional Requirements Relevant to Cryptoasset Businesses: Designated Activities Regime

The United Kingdom’s recently introduced “designated activities regime” empowers the FCA to impose requirements on firms that are not authorised by the FCA if they are carrying on a “designated activity” in the United Kingdom. This regime is being used to impose the following requirements in relation to cryptoassets:

Cryptoasset Public Offers and Admissions to Trading

Making a public offer of qualifying cryptoassets and admitting qualifying cryptoassets to trading on a qualifying CATP will become designated activities, as well as various related activities.
This means that public offers of qualifying cryptoassets in the United Kingdom will be unlawful unless an exemption is available or specified requirements are complied with. There are various exemptions, which include where the offer is of a qualifying cryptoasset that is admitted to trading on a CATP.
The requirements that must be complied with are mostly disclosure-related. There will be certain carve-outs for UK-issued qualifying stablecoins–i.e. a “lighter” regime will apply to their public offer or admission to CATPs.
The public-offer designated activity has a broad scope, covering any communication (including advertisement) that contains sufficient information on the cryptoasset being offered to enable decision-making (e.g. to buy).

Market Abuse in Cryptoassets

The designated activity regime is being used to impose rules on the use and disclosure of inside information as well as market manipulation in relation to qualifying cryptoassets listed on a CATP. The rules will:
- Prohibit insider dealing;
- Prohibit the unlawful disclosure of inside information;
- Require public disclosure of inside information; and
- Prohibit market manipulation.
Large CATPs (with an annual average revenue of £10 million or more) must share market abuse information with each other in certain circumstances. These circumstances include, e.g. where they suspect cryptoasset market abuse (i.e. those prohibited behaviours outlined above) and it is necessary to share the information to detect, prevent or disrupt the market abuse. There is a liability safe harbour for such sharing.
This is largely based on the current UK Market Abuse Regulation for traditional listed securities.

Transitional Arrangements

There are two transitional arrangements for existing cryptoasset firms that would come within the new regime. These are called the “saving provisions” and the “transitional provisions.” In summary:

Saving Provisions

If the firm applies for authorisation within the period from 30 September 2026 to 28 February 2027 (application period) and, by 25 October 2027 (the go-live date), the application is still open (e.g. the FCA has not decided whether to grant authorisation), then the firm enters into the “saving provisions.” This means that the firm may continue operating its business as usual until the application is determined.

Transitional Provisions

If the firm applies for authorisation and the application has been refused within the above application period, or if the firm applies for authorisation after the application period but before 25 October 2027 (the go-live date) and the application is still open by 25 October 2027, then the firm enters into the “transitional provisions.” This means that the firm may only operate its business in relation to pre-existing contracts (e.g. contracts entered into before the FCA refusal) and it may not take on new customers.

There is a long stop date for both arrangements, which is 25 October 2029. If a firm applies for authorisation after 25 October 2027, it must stop the UK business while waiting for the outcome of the application.

Not to Be Forgotten

Certain aspects of current UK law applicable to cryptoasset businesses will continue to be relevant under the new cryptoasset regulatory regime, but with some changes. We note in particular the following:

Current		Future Under New Regime
AML Registration	Certain cryptoasset businesses–“cryptoasset exchange providers” (CEP) and “custodian wallet providers” (CWP) – must register with the FCA for AML purposes. (CEPs provide exchange services between fiat and cryptoasset or between different cryptoassets; CWPs provide custody of others’ cryptoassets.) Note: This registration is not a regulatory licence or authorisation.	The AML registration regime remains. Cryptoasset businesses that are not required to be authorised by the FCA under the new cryptoasset regime (e.g. due to an exemption) may still need to seek AML registration and comply with that regime.
Cryptoasset Financial Promotion	Cryptoasset promotions (e.g. marketing) are prohibited unless exemptions are available. This applies to promotions relating to the following cryptoasset activities: Dealing in cryptoassets Arranging deals in cryptoassets Managing cryptoassets Advising on cryptoassets Agreeing to carry on any of the above	The cryptoasset promotion restriction will be expanded to cover the following new cryptoasset activities: Issuing stablecoin Safeguarding of cryptoassets Operating a cryptoasset trading platform Cryptoasset staking
Ban on Selling and Marketing Cryptoasset Derivatives	Certain UK-authorised investment firms (such as securities dealers/brokers) are banned from selling or marketing cryptoasset derivatives to retail investors in the United Kingdom.	The FCA proposes to not apply these bans to authorised cryptoasset firms under the new regime. However, given that the FCA generally considers cryptoasset derivatives to be securities, authorised cryptoasset firms may not be able to deal with them unless they also have the relevant FCA permissions relating to such securities.

How Might the Regulated Activities Regime Apply to Different Cryptoassets?

The FCA previously issued guidance on cryptoassets (PS19/22) in July 2019, which described different types of cryptoassets and the expected application of the existing UK regulatory regime at that time (i.e. 2019) to them. We set out below some thoughts on how the UK regulatory regimes might apply to the different types of cryptoassets identified by the FCA in light of the forthcoming UK cryptoasset regime.

Types of Cryptoasset	Description/Usage	How Might the UK Regimes Apply?
Exchange Token	Usually decentralised and primarily used as a means of exchange. Sometimes known as “cryptocurrencies,” “crypto-coins” or “payment tokens.” Designed to provide limited or no rights for token-holders, and there is usually not a single issuer to enforce rights against.	These tokens may be within the existing regulated activities regime or the new cryptoasset regime, depending on whether a given token could be characterised as qualifying cryptoasset or specified investment cryptoasset. A given token may also trigger other regulatory regimes, such as AML registration discussed above or payment services/e-money regulation (not discussed in this article). The analysis will turn on the token’s substance rather than how it is labelled, as well as how the token is used.
Security Token	Tokens that provide rights and obligations akin to the types of investments that are already regulated (e.g. shares, debentures and units in collective investment schemes), including tokenised versions of those traditional asset types.	The FCA indicates that they would regard such security tokens as “specified investment cryptoassets” under the new cryptoasset regime. Consider if the security that is tokenised is or has the characteristics of a specified investment, and if so whether it is a “relevant specified investment cryptoasset.”
Utility Token	Tokens that provide consumers with access to a current or prospective product or service and often grant rights similar to pre-payment vouchers.	These tokens may be within the existing regulated activities regime or the new cryptoasset regime, depending on whether a given token could be characterised as qualifying cryptoasset or specified investment cryptoasset. A given token may also trigger other regulatory regimes, such as AML registration discussed above or payment services/e-money regulation (not discussed in this article). The analysis will turn on the token’s substance rather than how it is labelled, as well as how the token is used.
Non-Fungible Token (NFT)	Confer digital ownership rights of a unique asset (e.g., a piece of digital art).	Generally not expected to be within the existing regulated activities regime or the new cryptoasset regime. A given NFT may trigger other regulatory regimes, such as AML registration discussed above or payment services/e-money regulation (not discussed in this article). The analysis will turn on the NFT’s substance rather than how it is labelled, as well as how the NFT is used.

Kai Zhang

London

Judith Rinearson

New York

Andrew J. Massey