Investment managers urged to start preparing for UK Crypto Assets Regime

The Investment Association (IA) has called on the investment management industry to start planning for the UK Crypto Assets Regime with the publication of new guidance.

Its UK Crypto Assets Regime: How the investment management industry can navigate new waters report, in collaboration with Travers Smith, seeks to help firms understand the scope and impact of the new regulated activities regime and how they can take advantage of innovation.

The guidance is aimed at fund and investment managers involved in digital markets or cryptoasset activities and their service providers.

It has been published following the release of a roadmap for the UK's cryptoassets regulatory regime, which is expected to come into force in October 2027.

The regime will bring a range of cryptoasset-related activities under the Financial Conduct Authority’s (FCA) regulatory scope and will affect investment firms handling digital assets.

The IA said its paper built on the understanding of the spectrum of cryptoasset-related business activities that will become subject to the new regulations, and sets out whether firms need to consider varying their existing regulatory permissions.

Guidance in the report included that firms should begin considering how their digital asset activities and wider business models will be affected by the regime and digital market evolution, and either begin planning for a variation of permission application or an application for FCA authorisation.

Furthermore, it said firms should ensure registration under the existing Money Laundering, Terrorist Financing and Transfer of Funds (MLRs) crypto asset regime where required, even if their digital asset-related activities fall outside the new regulatory framework.

The report added that firms should continue to monitor further FCA guidance and supervisory statements, which could help provide clarity on areas of uncertainty within the regime.

“Investment managers are at a pivotal moment in the evolution of digital markets, as DLT enables transformative new ways of transacting in tokenised funds, digital representations of mainstream assets, and increasing exposure to native cryptoassets,” said IA director of innovation and operations unit, and Engine director, John Allan.

“Beyond ensuring compliance, firms have a critical opportunity to use this shift both as a strategic initiative and a catalyst for profound innovation.

“Our report provides clear, practical guidance to help firms understand the implications of the new regime, assess their regulatory exposure, and make informed decisions that position them competitively for the opportunities ahead in digital markets.”

Travers Smith head of fintech, market infrastructure, and payments, Natalie Lewis, said: "The industry has been calling for clarity over the UK's approach to the regulation of cryptoassets for a number of years.

“With the legislation now in place and detailed final FCA rules expected relatively soon, now is the time for fund and investment managers to begin analysing the impact of the new framework on their current and planned business models.

“October 2027 will come around quickly and understanding a firm's potential touchpoints with the new cryptoasset rules will be crucial, particularly as more investment activity moves on-chain.

"We're delighted to have had the opportunity to partner with the IA on producing this latest report, which considers the new regime from the perspective of managers looking to operate tokenised funds, and those who are expecting to invest in cryptoassets on behalf of their clients.

“Although there are still some complexities in the regime which will need to be worked through, this report is intended to be a helpful launching pad for firms as they look to harness the exciting potential offered by the digital markets of the future."

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