Senior Associate Tom Crawford comments on the FCA’s new cryptoasset regulations in Accounting and Business magazine

New areas of advisory work for accounting firms:

"Except for a limited number of purposes, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 do not come into force until 25 October 2027. Until then, they are in force to enable the FCA to facilitate a smooth transition to the new regime. This includes making designated activity rules, giving guidance and directions, and enabling applications for Part 4A permissions to carry out regulated activities. A wide range of crypto activities will be regulated: from operating trading platforms and issuing stablecoin to dealing in cryptoassets as principal or agent and arranging deals, staking and safeguarding. Businesses engaging in these activities should not wait until October 2027 to consider and put in place the necessary permissions. Crypto businesses will need help building out the necessary compliance frameworks, internal controls and financial reporting processes that the FCA will expect to see in place before granting authorisation; areas where accounting firms are natural advisors.

"Another example where accounting firm can assist is in relation to businesses who seek to offer cryptoassets to the public in the United Kingdom or admit cryptoassets to a trading platform. Those businesses may be required by the FCA to publish a disclosure document which must contain a range of information that is material to a person considering buying the cryptoasset. This includes its features (such as the underlying technology and governance mechanisms), risks and matters relating to the person responsible for the offer and creating the asset. Accountants may be called upon to advise businesses on how they can ensure that they have valuation methodologies and classification frameworks rigorous enough to support their disclosure statement."

Financial reporting and valuation challenges for businesses holding cryptoassets:

"Regulation 50 of the new Regulations amends the Financial Services and Markets Act 2000 (Prudential Regulation of FCA Investment Firms) Regulations 2021 to bring cryptoassets within the scope of the prudential rules. This means that businesses regulated under the new regime holding cryptoassets will be subject to those rules, including PS26/12, which covers capital adequacy, liquidity, risk management and public disclosure. Businesses will need robust internal valuation and classification processes to determine how their cryptoasset holdings are treated for regulatory capital purposes. Getting those classifications wrong may have immediate consequences for how much capital a business must hold. Accountants can help businesses classify and value their cryptoassets, and translate regulatory requirements into practical frameworks by identifying the relevant risk metrics, stress-testing balance sheets and building internal reporting infrastructures."

Stress testing and preparation for crypto firms:

"The FCA has been clear in advising consumers that crypto is a "high risk investment", but businesses need to think beyond simple price crash scenarios. The new regime itself recognises the risks inherent in cryptoassets which point to a range of stress tests that businesses should consider modelling with the appropriate accountancy expertise. This includes, for example, to account for the possibility of market drawdowns (such as Bitcoin's 49% drawdown since its October 2025 peak), client withdrawals (such as the run on FTX in November 2022 following reports that it had been using client funds to support a related trading firm), cyber incidents (such as the hack of Bybit in February 2025) and operational outages."

Governance and documentation expectations under the new regime:

"The FCA will expect to see the usual documentation for regulated businesses, including to comply with the Principles for Businesses, the Consumer Duty, the Threshold Conditions and the Senior Managers and Certification Regime. However, the Regulations require regulated businesses to also have in place systems and procedures aimed at preventing, detecting and disrupting insider dealing and market manipulation, appropriate internal whistleblowing procedures for reporting contraventions (or potential contraventions) of the Regulations and related FCA rules, and maintaining insider lists."

The role of accountants in forecasting, scenario analysis, risk management and assurance under the new regime:

"The prudential framework under PS26/12 requires authorised cryptoasset firms to meet capital adequacy, liquidity, risk management, and public disclosure obligations. Accountants are well placed to help firms build the financial models, capital adequacy calculations, and liquidity forecasting that these requirements demand. The Regulations require regulated businesses to maintain effective systems for detecting and preventing market abuse, and to keep insider lists available for the FCA on request. On top of this, crypto businesses have to meet the FCA's usual operational resilience expectations for regulated businesses. Together, this creates a new assurance market that many crypto businesses will be encountering for the first time. They will need independent, credible and documented third-party validation of their stress-testing outputs, internal capital assessments, and risk management frameworks; exactly the kind of work that accounting firms are built to deliver."