The Financial Conduct Authority has softened several of its originally proposed crypto rules, choosing operational flexibility over the tighter restrictions it had floated in earlier consultations.

The revised approach falls under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, passed in February 2026. The full regime doesn’t take effect until October 25, 2027, but the FCA is opening its application gateway for firms to seek authorization starting September 30, 2026, running through February 28, 2027.

What actually changed

Two reversals stand out. First, the FCA will now allow matched principal trading and affiliate trading on UK Cryptoasset Trading Platforms, known as CATPs. Earlier proposals had sought to restrict these activities.

Second, the regulator walked back plans to broadly limit retail access to cryptoasset lending and borrowing. Instead of blanket restrictions, the FCA will require specific disclosure and consent guidelines.

These shifts didn’t come out of nowhere. The FCA had already signaled a more permissive posture when it lifted its ban on retail investment in cryptoasset exchange-traded notes, or cETNs, back in October 2025. That move gave everyday investors access to crypto-linked products listed on recognized exchanges, a category that had been off-limits to non-professional investors.

The regulatory architecture

The FCA’s approach follows the UK government’s guiding principle of “same risk, same regulatory outcome.” The idea is straightforward: if a crypto product behaves like a traditional financial product, it should face comparable oversight.

The FCA’s analysis, published in April 2026, laid out the rationale for these changes in detail. The regulator acknowledged that its earlier, more restrictive proposals risked pushing activity offshore or into unregulated corners.

What this means for investors

Allowing matched principal trading on CATPs should improve liquidity on UK-based exchanges. When platforms can facilitate trades directly rather than routing through external market makers, spreads tend to tighten and execution speeds improve.

The decision to keep retail lending and borrowing open, with disclosure guardrails rather than outright bans, is notable. Crypto lending was one of the sectors hardest hit by the 2022 market collapse, with platforms like Celsius and BlockFi imploding spectacularly. The FCA could have used that history to justify shutting the door entirely. Instead, it opted for transparency requirements.

Investors should pay close attention to the authorization window opening in September 2026. Which firms apply, which get approved, and which don’t will reshape the competitive landscape of UK crypto services heading into 2028.