UK clarifies crypto licensing rules as banks maintain exchange payment restrictions

The UK Financial Conduct Authority has finalized guidance for its upcoming cryptocurrency licensing regime, set to take effect on October 25, 2027, with applications opening on September 30, 2026. While HM Treasury has introduced draft exemptions for UK-issued stablecoin payments and non-discretionary DeFi interfaces, retail banks maintain widespread restrictions on exchange payments. Nine major UK banks, including Barclays and NatWest, continue to limit or block transfers, prompting a parliamentary inquiry into whether these commercial restrictions remain justified for licensed firms.

FCA crypto authorization regime

• ▪The UK Financial Conduct Authority published final guidance on September 16, 2026, outlining which cryptocurrency activities will require regulatory authorization under a new regime taking effect on October 25, 2027.
• ▪The Financial Conduct Authority's new regulatory regime covers activities including qualifying stablecoin issuance, operating trading platforms, custody, dealing, arranging transactions, and staking services.
• ▪UK crypto firms’ money laundering registrations do not automatically become authorisation under the new FCA regime
• ▪The FCA cryptoasset application window for transitional arrangements runs from September 30, 2026 to February 28, 2027

UK bank crypto payment limits

• ▪Barclays limits personal and business bank transfers to cryptocurrency exchanges to £2,500 per transaction and £10,000 per calendar month, while Barclaycard has prohibited cryptocurrency transactions since June 2025.
• ▪Chase UK blocks all outbound bank transfers and card payments identified as cryptocurrency transactions, while Metro Bank has blocked outbound payments to known crypto exchanges since November 2024.
• ▪Research by the UK Cryptoasset Business Council estimates that approximately 40% of attempted bank-to-exchange cryptocurrency transfers in the UK are blocked or delayed.
• ▪NatWest limits identifiable cryptocurrency exchange payments to £1,000 per day and £5,000 across 30 days, citing fraud and scam prevention as the reason for these controls.
• ▪Nine major UK retail banks currently impose limits or outright blocks on customer payments routed to cryptocurrency exchanges.

Treasury stablecoin payment exemptions

• ▪The Financial Conduct Authority plans to launch a consultation in October 2026 to address how HM Treasury's legislative amendments will affect its perimeter guidance.
• ▪HM Treasury laid draft amendments before Parliament that would exempt transfers and exchanges of UK-issued qualifying stablecoins from regulated dealing and arranging activities, removing stablecoin payments from licensing requirements.
• ▪According to HM Treasury's explanatory memorandum, lending, borrowing, and exchanging UK-issued stablecoins for other cryptocurrency assets will remain regulated activities.

DeFi interface regulatory carveouts

• ▪The draft amendments by HM Treasury exclude certain proprietary trading and market making from being regulated as dealing as principal.
• ▪HM Treasury's draft amendments exclude firms that are not authorized by the Financial Conduct Authority or are not payment service providers from regulated arranging activities if they merely provide a technical interface to decentralized protocols without exercising discretion.

Banking access for licensed firms

• ▪HM Treasury stated in a March parliamentary answer that banking services decisions remain commercial in nature, meaning banks are not legally compelled to lift payment restrictions for licensed cryptocurrency firms.
• ▪A cross-party UK parliamentary group launched an inquiry in the summer of 2026 to examine the banking access difficulties faced by cryptocurrency firms and the payment limits imposed on retail users.