UK Crypto Firms Hesitate as FCA Speeds Approvals Ahead of 2026 Rules

The UK’s Financial Conduct Authority (FCA) has significantly accelerated its approval process for crypto service providers, reducing average processing times by 69% since the 2022/23 financial yeartitle1^[1]. However, the number of applications received by the regulator has declined by 43.5% over the same period, with successful approvals falling from eight in 2022/23 to three in 2024/25title1^[1]. This trend reflects a broader shift as firms adopt a wait-and-see approach ahead of anticipated regulatory changes.

The FCA’s improved efficiency—cutting approval times from an average of 511 days to 158 days—has been welcomed by industry stakeholders, who cite it as a step toward restoring confidence in the UK’s crypto sectortitle1^[1]. Simon Jennings, Executive Director of the UK Cryptoasset Business Council, noted that the regulator’s internal capacity-building and focus on growth have streamlined operationstitle1^[1]. However, the approval rate has declined from 17.4% in 2022/23 to 11.5% in 2024/25title1^[1], while the total number of applications dropped from 46 to 26 over the same periodtitle1^[1].

Industry representatives attribute the decline in applications to uncertainty surrounding the UK’s upcoming regulatory framework. Brett Hillis, a partner at Reed Smith, highlighted that firms may be delaying applications to avoid navigating two consecutive FCA processes—initial registration and full authorisation under the new regimetitle1^[1]. The FCA has acknowledged this trend, with one source suggesting that the prospect of a 2026 regulatory overhaul is influencing timing decisionstitle3^[3].

The FCA’s recent consultation on minimum standards for crypto firms aims to address these concerns while fostering a “sustainable and competitive” sectortitle1^[1]. The regulator has also introduced pre-approval meetings and webinars to guide applicantstitle3^[3], though Jennings emphasized the need for further transparency and resource allocation to reduce perceived bureaucratic hurdlestitle1^[1].

Globally, the UK faces stiff competition from jurisdictions like Singapore and Dubai, which are actively courting crypto firmstitle3^[3]. While the FCA’s faster processing times are a positive step, the drop in applications underscores lingering challenges. The UK’s crypto sector must balance regulatory rigor with agility to retain its position as a global hub. As Jennings noted, “If the UK wants to lead, we need to be alive to that competition.”title1^[1]