UK crypto regulation, and what it means in Wales

The single most consequential misunderstanding in UK crypto is the belief that "FCA-registered" means "FCA-approved and protected". It does not, and the gap between those two things is where most consumer harm lives. Getting this right is more useful than any platform comparison.

There is also a Welsh dimension that gets almost no coverage. Financial services regulation is reserved to Westminster, but the physical enforcement — the part that actually happens in a shop on a high street — runs through Welsh local authorities and Welsh police forces. That split explains a lot about how the crypto ATM situation developed.

The four regimes operating now

1. Anti-money-laundering registration

Since January 2020, firms carrying on cryptoasset exchange provider or custodian wallet provider activity in the UK must be registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Registration requires the firm to satisfy the regulator on its AML systems and controls, its financial crime framework and the fitness and propriety of its senior management.

Carrying on that activity without registration may be a criminal offence, punishable by up to two years in prison, a fine, or both. This is the regime that makes every crypto ATM in the UK unlawful, since no operator has ever obtained registration.

What registration does not do is regulate the product, the price, the custody arrangements or the firm's conduct toward you. There is no FSCS cover for cryptoassets and generally no Financial Ombudsman route for the crypto activity itself.

2. The Travel Rule

Part 7A of the MLRs, in force since 1 September 2023, requires firms to collect, verify and transmit identifying information about the originator and beneficiary of cryptoasset transfers. The FCA published expectations for compliance and the Joint Money Laundering Steering Group issued detailed guidance. From 30 June 2026 the customer due diligence threshold is a flat £800 in cryptoasset value, replacing the previous euro-denominated figure.

For a retail user this shows up as questions when you move coins: who controls the destination wallet, what the transfer is for, and where assets arriving from an external address originally came from.

3. The Financial Promotions regime

Since 8 October 2023, communicating a qualifying cryptoasset financial promotion to UK consumers has been restricted. Promotions must carry prescribed risk warnings, refer-a-friend bonuses are banned for qualifying promotions, and first-time investors with a firm face a 24-hour cooling-off period, a personalised risk warning and an appropriateness assessment.

A registered firm can communicate its own promotions. Others must have them approved by an authorised person. If a service is marketing to you with none of this apparatus, that is a strong signal it sits outside the regime.

4. Tax

Not a regulatory regime as such, but it applies regardless of the others. HMRC treats exchange tokens as chargeable assets, so disposals attract Capital Gains Tax, while mining, staking and certain airdrops are treated as income. Nothing about this is devolved. Our tax guide covers it.