UK FCA Crypto Registration Requirements: What's Different From MiCA

Brexit means dual compliance. UK authorization doesn't help in the EU, and MiCA doesn't cover the UK. Here's how they compare.

The UK's Financial Conduct Authority has regulated crypto-asset service providers since January 2020 under the Money Laundering Regulations. This pre-dates MiCA and operates on different principles. Firms wanting both UK and EU market access need separate authorizations, built on different regulatory frameworks. Understanding the differences matters for anyone planning cross-border operations.

The FCA approach

The FCA crypto registration focuses primarily on anti-money laundering controls. It's not a comprehensive regulatory framework like MiCA. Registered firms can operate in the UK, but the registration confirms only that their AML systems meet FCA standards.

Who needs to register: Any firm carrying on crypto-asset activities in the UK, including exchanges, custodians, and crypto ATM operators. The MLR definition covers activities relating to exchange, issuance, or administration of crypto-assets.

What registration requires: Fit and proper assessment of beneficial owners and managers, adequate AML policies and procedures, risk assessment documentation, and ongoing compliance capability. Capital requirements are minimal compared to MiCA (no EUR 125,000 baseline).

What it doesn't cover: Conduct of business rules, market integrity, capital adequacy in the MiCA sense, or consumer protection beyond basic disclosures. The FCA registration is narrower than full regulatory authorization.

The application reality

FCA crypto registration has a deserved reputation for difficulty. The rejection rate has exceeded 80% at various points. The FCA withdrew from processing applications in 2021 after receiving hundreds it couldn't handle, and has maintained a cautious approach since.

Typical issues that sink applications:

• AML frameworks that look copied from templates without genuine business-specific adaptation
• Directors or beneficial owners with unclear backgrounds or previous regulatory issues
• Insufficient evidence of operational capability (staff, systems, processes)
• Business models the FCA considers too high-risk (certain DeFi activities, privacy coins)

Processing times run 6-12 months for complete applications. Many firms have operated under the Temporary Registration Regime while waiting, though that regime has largely wound down.

How MiCA differs

MiCA is a comprehensive regulatory framework. Where the FCA registration addresses only AML, MiCA covers:

Capital requirements: EUR 50,000-150,000 depending on activity type, with prudential requirements ongoing.

Conduct of business: Rules for how firms must treat customers, handle complaints, disclose information, and manage conflicts of interest.

Market integrity: Prohibitions on insider dealing and market manipulation applicable to crypto-assets.

Governance: Detailed requirements for organizational structure, risk management, and internal controls.

The ESMA MiCA framework is closer to traditional financial services regulation than the UK's targeted AML approach.

Serving both markets

Firms wanting UK and EU customers need:

FCA registration for UK operations, focusing on AML compliance evidence

MiCA authorization from any EU member state, with passporting to other member states

The requirements don't map directly onto each other. MiCA's capital requirements exceed FCA minimums. FCA's fit-and-proper assessments are sometimes stricter in practice than MiCA equivalents. Some documentation can serve both applications, but they're fundamentally separate processes.

For firms already MiCA-authorized in the EU, UK registration remains a separate application. There's no mutual recognition, no expedited process based on EU authorization. Brexit unwound the regulatory alignment that would have made this simpler.

The UK's next steps

The UK government has indicated it will develop a more comprehensive crypto regulatory framework beyond the current AML-focused approach. The consultation on future regulation suggests movement toward something more MiCA-like, covering conduct, market integrity, and consumer protection.

Timeline remains unclear. The government has priorities beyond crypto regulation, and the FCA is already stretched. Firms planning UK market entry should build for the current registration regime while watching for developments.

The practical advice: don't assume equivalence. The UK and EU are separate regulatory jurisdictions with separate requirements. Plan and budget for both if you need both.