UK Law and Practice Contributed by: James Burnie, Kathryn Dodds, Nicky Androsov and Olga Antonova, gunnercooke llp
The UK’s position on ensuring that tax is paid is hard- ening. In particular, from 1 January 2026, the UK has implemented the Crypto-Asset Reporting Framework (CARF), which requires crypto-asset platforms to pro- vide a range of information to HMRC on UK citizens – facilitating the ability of HMRC will be able to check that UK citizens are paying the appropriate amount of tax. There are also moves to make it harder for DAOs to claim to be outside of UK tax where they are effec- tively operated from the UK. 1.2.5 Insolvency There are no specific resolution or insolvency require- ments/regimes for digital asset firms in the UK. How- ever, as crypto-assets are recognised as property, crypto-assets held by a company will be treated as part of the estate of the insolvent entity. 1.2.6 Industry and Trade Bodies See 1.1.5 Industry and Trade Bodies . The relevant associations do not tend to distinguish between blockchain and crypto-assets. However, in practice, much of the work is focussed on lobbying on crypto- asset regulation, given that is generally the most con- tentious topic in the industry. 2. Regulation 2.1 Regulators and International Alignment The primary regulatory body for blockchain and cryp- to-asset businesses in the UK is the FCA, which is in the process of developing and implementing a com- prehensive regulatory framework for the industry. The Prudential Regulatory Authority and the Bank of Eng- land are more concerned with matters of prudential and systemic risk for the UK financial services sector, and as such have tended to take less of an interest in the industry, given that it is still relatively nascent. One exception to this, however, has been in relation to stablecoins, where the Bank of England is develop- ing its position in terms of regulating stablecoins that pose a potential systemic risk. The Bank of England has faced some criticism for its approach here, given that it has considered for example limiting the amount of stablecoins that persons may hold – a measure considered unworkable in practice. However, as no
stablecoin has been deemed a systemic risk as yet, it is unclear how this might play out in practice. In terms of international alignment, the United King- dom has actively implemented laws and standards proposed by international bodies such as the Finan- cial Action Task Force and the Bank for International Settlements, and in certain aspects has sought to go further than is required by these bodies, with a view to being perceived as a gold standard jurisdiction for the industry. It is notable that various regulators inter- nationally have collaborated with the FCA in terms of helping to set a global approach to regulation of blockchain and crypto-assets – cementing the FCA’s position as helping to lead on global regulation of the sector. 2.2 Crypto-Asset Regulatory Frameworks The FCA has provided a helpful guide which clearly sets out the different bases on which crypto-assets can be categorised, and was one of the first regula- tors globally to do this. The approach aligns with the general position under United Kingdom law, in that if a crypto-asset meets the definition of a specified invest- ment then it is regulated, otherwise it is an unregulated token. The nature of the regulated specified invest- ment depends on whether the crypto-asset meets the definition of electronic money (in which case it is classified as an e-money token) or a security token (in which case it is classified as a security token). Other- wise, crypto-assets are classified as “unregulated”. However, it is worth noting that the fact that a crypto- asset is considered “unregulated” does not, in fact, mean that such crypto-assets are not subject to regu- lation. Currently, the following activities in relation to all crypto-assets (regardless of regulatory classifica- tion) are regulated and require registration with the FCA under the Money Laundering Regulations 2017 (MLRs). • Acting as a crypto-asset exchange provider (including in the context of acting as an ATM, Peer- to-Peer Provider, or issuer of new crypto-assets). The scope of this activity is broad, as it includes exchanging or arranging, or making arrangements with a view to the exchange of crypto-assets for money or money for crypto-assets, or one crypto-
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