The UK Financial Conduct Authority opened authorization applications for crypto firms on September 30, with a new regime expected to begin on October 25, 2027. The rules clearly distinguish the treatment of Bitcoin: coins used as collateral for qualifying borrowing must remain protected under a trust structure, while those transferred for yield-generating lending can benefit from a trust exemption. This difference is crucial in the event of platform failure, as recovery rights vary depending on the service classification. The regime will not add any Financial Services Compensation Scheme coverage, and safeguarding trusts do not guarantee full asset repayment. The FCA plans a consultation by end of 2026 on managing crypto firm failures, including distribution rules for failed custodians and stablecoin issuers.
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