FCA Drafts Crypto Crime Guidance a Year Before UK Licensing Begins

Crypto firms in the U.K. have exactly one year before they need full authorization from the Financial Conduct Authority. From Oct. 25, 2027, firms doing certain crypto activities there must be authorized under new 2026 crypto regulations, the FCA says in consultation paper CP26/38, published Friday.

The paper proposes updates to the FCA's Financial Crime Guide, including a new crypto section. The regulator says the guide sets no new rules. It describes good and poor practice for firms preparing to apply. Comments close Dec. 24, per the consultation page.

No fixed tracing limit

The draft sets no universal number of blockchain "hops" a firm must trace before it stops checking where funds came from. TokenPost and Finance Magnates both reported that it treats a rigid cutoff as poor practice when it isn't matched to a firm's own risks.

Firms that use blockchain analytics tools should understand how the scores are produced, tune them to the risks they have identified and record their decisions, the draft says. Transfers from self-hosted wallets, or involving mixers and privacy coins, may call for extra checks.

Why the FCA is pushing now

The paper cites the U.K.'s 2025 National Risk Assessment, which ranked crypto's money laundering risk as high and its terrorist financing risk as medium. It also restates Travel Rule duties: firms must collect sender and recipient details with transfers and report counterparties that keep failing to supply them.

For exchanges eyeing the U.K., the draft is a preview of what supervisors will look for in applications.