The UK crypto registration deadline and the shift to European licensing

The pressure of the FCA deadline

The February 28, 2027, deadline for UK cryptocurrency businesses to submit FCA authorization applications dictates which firms continue regulated activities during the assessment period. This five-month window opened on September 30, 2026. Firms that miss this cutoff lose their protection and must pause regulated activities until the FCA reaches a decision. I find the high rejection rate concerning since the FCA rejected or received withdrawals for 80 percent of applications. Only 33 firms reached approval status. The regulator noted that many businesses applying for registration did not meet the expected benchmark for preventing criminal funds. While companies like Revolut and Copper remain on the temporary register, others like Wirex and Globalblock plan to move to Croatia and Lithuania to seek different European regulation after they decided to withdraw their applications. The FCA opened a pre-application support service in July to help firms prepare before filing. Applicants must satisfy new standards for prudential management, governance, conduct, safeguarding of client assets, and operational resilience. The framework captures a broad swath of the industry including trading venues, intermediaries, custodians, stablecoin issuers, lending services, and certain staking providers. Nick Jones, founder and chief executive of Zumo, argued in a Financial Times letter that clearer rules could draw more established financial institutions into the sector. He pointed to regulatory uncertainty and partner risk as barriers.

Regulatory expansion across the EEA

Kraken’s MiCA license from the Central Bank of Ireland provides a path for European expansion. This license allows Kraken to serve all 30 countries in the European Economic Area. Coinbase also holds a MiCA license via the Luxembourg regulator. These platforms avoid the uncertainty that keeps UK firms in limbo. The platform provides over 450 digital assets and maintains deep euro liquidity. The company reported $1.5 billion in revenue last year and processes approximately $1.37 billion in daily trading volume. The exchange also holds a Markets in Financial Instruments Directive license for derivatives trading. ByBit EU also holds a MiCA license in Austria and provides over 600 cryptocurrencies. OKX operates from Malta and provides access to 240 tokens and more than 260 trading pairs. Tether announced it will not seek MiCA registration, which caused some exchanges to delist USDT in the EU.

Hargreaves Lansdown began providing nine Bitcoin and Ether crypto exchange-traded notes to eligible clients on September 3. Users must self-certify as advanced investors and pass a product-risk assessment to access these products. This launch followed the FCA decision in October 2025 to permit retail access to qualifying crypto ETNs.

Retail protections and asset separation

Revolut maintains a strict divide between its banking and crypto services. While Revolut Bank UK Ltd protects eligible deposits up to £120,000 through the Financial Services Compensation Scheme, crypto and stocks operate through separate Revolut entities. This structure prevents crypto assets from receiving the same statutory deposit guarantee as bank accounts. You should verify which entity holds your assets if you use Revolut for both fiat and crypto. The European Securities and Markets Authority limits leverage for retail investors to protect them from significant losses. For cryptocurrencies, the leverage limit for opening a position is 2:1. This compares to 20:1 for gold and 30:1 for major currency pairs. The regulator also mandates negative balance protection, prevents the use of incentives by a CFD provider, delivers firm specific risk warnings, and enforces margin close out rules on a per account basis. Research from the Central Bank shows that 75 percent of retail CFD clients who invested in CFDs during 2013 and 2014 made a loss. The ESMA changes also prohibit the marketing, distribution, or sale of binary options to retail investors. This move aims to protect investors from products where they can bet on whether the value of a financial asset will rise or fall in a fixed time. Does the concentration of assets in a few licensed entities increase systemic risk?