The adoption of blockchain technology and asset tokenization is advancing at a rapid pace, but the real engine driving its global development is the existence of a clear, consistent and innovation-friendly legal framework.
Some countries have already established themselves as regulatory benchmarks, establishing specific rules for cryptoassets, DLT infrastructures and the issuance of legally backed tokens. In this article we show you the relevant information about blockchain regulation in the UK, which you can use as a guide if you are looking to operate internationally or evaluate different strategic locations.
Current legislation on blockchain and virtual assets in the United Kingdom
Financial Services and Markets Act (FSMA)
The FSMA incorporates cryptoassets within the UK financial regulatory framework. It defines what types of tokens are subject to regulation and establishes requirements for their issuance, custody, trading and promotion. It also gives the FCA expanded powers to oversee digital asset markets and platforms, including exchanges and custodians.
Cryptoassets Order
This order integrates cryptoassets under the FSMA. It defines categories such as qualifying cryptoassets, qualifying stablecoins and security tokens, and establishes which activities are regulated: issuance, custody, operation of exchanges, intermediation and DeFi services. It will grant the FCA enhanced powers and require licensing of any provider, even if operating from abroad.
UK AML Regulations
Cryptoasset service providers must mandatorily register with the FCA and comply with national anti-money laundering prevention regulations. This includes strict KYC obligations, continuous transaction monitoring and suspicious activity reporting, aligning with international financial compliance standards.
Digital Securities Sandbox
The UK has the Digital Securities Sandbox, managed by the FCA and the Bank of England, which allows firms to test innovations in blockchain and digital assets under regulatory oversight, facilitating experimentation and the development of new business models in a controlled environment.
Tokenization makes it possible to digitally represent real-world assets through blockchain, but for it to have legal value, it is essential that there is a regulatory framework that recognizes this operation. The UK adopts its own approach, establishing specific rules for the issuance, custody or trading of tokens. In this block we explain how asset tokenization is regulated from a legal point of view, taking an advanced jurisdiction such as the UK as an example.
Regulation of asset tokenization in the UK
The UK allows the tokenization of both financial and real assets within a robust and consolidating legal framework. Security tokens, which represent rights to financial assets (stocks, bonds, fund shares, etc.), are regulated as financial instruments under the Financial Services and Markets Act (FSMA). The issuance, custody, trading and other related services require authorization from the FCA, which imposes supervisory and compliance requirements.
Tokenization of non-financial assets, such as real estate, art or tangible assets, is based on UK private law, with no specific law regulating this activity exclusively. However, DLT technology registries have legal recognition in the field of ownership and rights over assets, which brings legal certainty to transactions.
In parallel, the UK is implementing in 2025 the new Cryptoassets Order 2025, which will expand the regulatory framework to include activities such as issuing stablecoins, custody, operation of exchanges, intermediation and DeFi services. This regulation will require FCA authorization for all providers offering services to UK customers.
Financial Conduct Authority (FCA)
The FCA is the main regulatory body for digital assets. It supervises and licenses companies operating cryptoassets in the country. It sets rules on transparency, consumer protection, risk disclosure and operational resilience, applying standards similar to those of traditional financial institutions.
United Kingdom Treasury (HM Treasury)
HM Treasury plays a key role in shaping regulatory policy and drafting the legal frameworks governing the sector, such as the recent draft Financial Services and Markets Act 2000 – Cryptoassets Order 2025. Treasury coordinates national strategy and international cooperation on digital assets.
Bank of England
It monitors financial stability risks arising from cryptoasset exposures, especially in the banking and payments sector, and requires disclosure of cryptoasset exposures by entities under its supervision.
Launching a business based on digital assets requires more than just technology: it is also necessary to comply with legal requirements such as licensing, registration and regulatory obligations. These conditions ensure that the business model is viable and sustainable over time, and that it complies with transparency and fraud prevention standards. In this section we explore what licenses are typically required and what compliance criteria blockchain companies operating in the UK must follow.
What licenses and requirements are needed to trade cryptoassets in the UK?
FCA registration and license
It includes licensing requirements for exchanges, custodians, stablecoin issuers, agents, brokers and staking service providers, for both domestic and foreign companies offering services to UK customers. Firms will be required to submit a business plan, demonstrate a robust governance structure, meet capital and operational resilience requirements, and undergo a thorough assessment by the FCA.
AML/KYC Compliance
Anti-money laundering (AML) and know-your-customer (KYC) obligations are strict and mandatory. All companies dealing with cryptoassets must implement robust customer identification and verification processes, financial crime prevention policies, real-time transaction monitoring and suspicious transaction reporting to the competent authorities.
Other regulatory requirements
Crypto companies in the UK must comply with the DORA Regulation, in addition to minimum capital requirements and annual technical audits. DORA requires ICT risk management systems, cybersecurity, business continuity and regular digital resilience testing. It also requires supervision of external technology providers and training of staff in digital security.
Are you exploring developing your blockchain project in the UK?
At Metlabs we help companies like yours and offer comprehensive support in the development of blockchain projects and tokenization of assets such as real estate, carbon credits, commodities, intellectual property, financial instruments, franchises and more, fully aligned with UK blockchain regulation and international regulatory standards.
Contact us and find out how we can help you meeting all your business model needs, from technical validation and structuring to design, development and implementation of custom blockchain solutions, ready to scale from day one.