UK Crypto Firms Get Green Light to Apply for Authorization Amid New Regulations

As of September 30th, UK-based crypto firms can begin applying for authorization under new regulations that will treat Bitcoin used as collateral in lending differently from coins transferred into lending services.

The Financial Conduct Authority (FCA) has finalized the rules for crypto custody and borrowing, which will come into effect on October 25, 2027. The key distinction lies in what platforms can do with customer assets: under the new regime, qualifying borrowing collateral must remain safeguarded, while lending services can use an exemption from the trust requirement.

For Bitcoin used as collateral, firms cannot take full ownership unless the client has given explicit consent to discharge debt arising from that borrowing service. A written agreement is also required for the firm to take ownership and discharge an obligation.