UK Crypto legal update: developments to watch in 2026

1. A new UK Crypto regulatory regime

The UK is introducing a formal regulatory regime for crypto assets under the Financial Services and Markets Act 2000 (FSMA). A draft Crypto Assets Order has been published, and the new framework is expected to take full effect from 2027. The changes will require crypto firms to be authorised by the Financial Conduct Authority (FCA) and subject to conduct and transparency standards akin to other financial products.

It marks a clear shift from a lightly regulated market to one with clearer guardrails, underpinning the longer-term commercial confidence in the UK as a crypto hub. For users, FCA authorisation should provide greater confidence in how crypto business are run and supervised.

2. Stablecoin regulation taking shape

In parallel with the wider FSMA reform, the UK is developing a regulatory framework for fiat-backed stablecoins, particularly where they may be used in retail or wholesale payments.

HM Treasury, the FCA and the Bank of England are actively consulting on how these assets should be supervised. Under current proposals the FCA would regulate the issuance and custody of stablecoins, including requirements for backing assets, redemption, and consumer disclosure; and the Bank of England would regulate stablecoin payment systems designated as “systemic” – those large enough that failure or disruption could affect consumers, merchants or wider financial stability.

These measures signal that stablecoins are transitioning from lightly monitored crypto instruments into regulated payment-like products, with compliance standards expected to expand as the new regime is implemented.

3. A new Crypto tax reporting framework

The UK has committed to implementing the OECD’s Crypto-Asset Reporting Framework (CARF), which introduces international tax reporting obligations for cryptoasset service providers.

From 1 January 2026, firms operating in scope will be required to collect detailed customer and transaction data in line with CARF standards. The first reports will be filed with HMRC by 31 May 2027, covering the 2026 calendar year, after which annual reporting becomes mandatory and information will be shared with other participating jurisdictions.

The framework creates a standardised way for tax authorities to receive crypto transaction data, aligning with the reporting regimes applied to traditional financial services.

4. Statutory recognition of Crypto assets as legal property

On 2 December 2025, the Property (Digital Assets etc) Act 2025 received Royal Assent and came into force, marking a significant development in modernising the legal framework for digital assets. For the first time, digital assets such as cryptocurrencies and non-fungible tokens (NFTs) are explicitly recognised in statute as capable of being personal property. This statutory clarity strengthens the legal basis for asserting ownership over misappropriated crypto assets and makes proprietary remedies – such as freezing injunctions – easier to access. It also provides a foundation for ongoing judicial development in fraud and asset recovery.

5. Litigation and enforcement trends

Civil claims involving crypto assets continue to increase in number and complexity. Recent proceedings – including those arising out of the OneCoin / “Cryptoqueen” scheme – demonstrate the willingness of the English courts to grant powerful remedies where wrongdoing is alleged. These have included worldwide freezing injunctions, disclosure orders against exchanges and payment providers, and relief against “persons unknown”.

At the same time, the courts are now turning to the practical consequences of digital asset ownership and misuse. Recent High Court decisions – including D’Aloia v Persons Unknown, Jones v Persons Unknown and LMN v Bitflyer – illustrate the types of issues now coming before judges: whether crypto exchanges can be compelled to identify wrongdoers, how proprietary claims operate when assets have been commingled or moved offshore, and the circumstances in which relief can be granted against unknown or unserved defendants. With property status now confirmed by statute, the focus is shifting from the “whether” to the “how” of enforcing rights and recovering value.

While appellate authority remains limited, the direction of travel is clear: English law is steadily developing to offer victims clearer, more predictable pathways to recover assets and pursue wrongdoing. The courts have shown readiness to adapt established principles to new technology and are building a body of case law that recognises the realities of blockchain-based systems.

Key takeaways

• Crypto firms serving UK clients must prepare for FCA regulation;
• Stablecoins used in payment and settlement chains are expected to fall within regulatory scope; businesses adopting or accepting stablecoins should plan for increased oversight;
• 1 Jan 2026 starts the clock for mandatory transaction data collection by cryptoasset service providers – individuals and businesses should anticipate increased tax scrutiny;
• Crypto is now legal property – unlocking clearer routes to recovery and insolvency actions; and
• Courts are enabling recovery. Working alongside forensic blockchain investigators and deploying interim relief – including freezing injunctions and proprietary claims – has become essential to maximising the prospects of recovery.

How we can help

Our specialist lawyers advise on all aspects of crypto law and disputes, including:-

• Regulatory compliance and authorisation strategy for crypto businesses entering the UK market;
• Asset tracing and civil recovery involving stolen or misappropriated crypto;
• Urgent interim applications, such as freezing orders and Norwich Pharmacal Orders; and
• Litigation in the UK courts and overseas, including support for insolvency practitioners in recovering crypto assets on behalf of insolvent estates.

If you require guidance on regulatory preparedness or support responding to crypto fraud or asset loss, contact our team to discuss how we can assist.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

Meet the team:

1. 

   • Patrick Martinez-Brown

   • Associate
   • Commercial Disputes

   Visit Patrick's profile

View the whole team