• •The UK Financial Conduct Authority (FCA) will require crypto firms to demonstrate resilience to market shocks starting in October 2025.
• •Firms must now hold capital against risky assets, aligning digital asset oversight closer to traditional financial sector regulations.
• •It remains unclear how the FCA will treat firms currently operating under the 'temporary registration' regime if they fail to meet these new capital adequacy standards.

The Financial Conduct Authority has announced that crypto firms operating in the UK must meet new capital adequacy and risk management standards by October 2025. This move follows years of a light-touch approach, bringing crypto oversight in line with the stringent capital buffers required of traditional banks and investment firms. While the FCA aims to curb systemic risk, the policy shift creates significant friction for smaller, capital-poor startups that may struggle to meet these liquidity thresholds. The long-term impact on the UK’s competitiveness as a digital asset hub remains to be seen as firms assess whether to comply or exit the market.