The UK crypto sector is approaching a significant regulatory turning point. Many firms currently operating under the Money Laundering Regulations (MLR) are now preparing for a move into a broader Financial Services and Markets Act (FSMA) authorisation regime. This is not a routine compliance update - it marks a fundamental shift in governance, conduct, prudential standards, accountability and how crypto businesses are expected to operate.
For many crypto native firms, success under FSMA won’t be defined by policies alone - it will depend on organisational readiness: having the right leadership, governance structures and specialist talent in place to function effectively in a fully regulated environment.
As Quentin Downes, Divisional Director for Compliance, Risk and Financial Crime at ‘Twenty84 powered by Butler Rose’, explains: “FSMA readiness is about more than compliance. It’s about building the right leadership, governance, and talent structures to support sustainable growth in a regulated market.”
Why FSMA Is a Step Change
Under MLR, many firms have operated with lean teams, informal reporting lines and limited formal oversight. FSMA changes this entirely. Firms will need to demonstrate clear accountability under SM&CR, board level oversight, and robust frameworks across risk, conduct and controls.
Compliance functions that once revolved around a MLRO will need to expand. Risk oversight will become more formalised, and areas such as prudential requirements, consumer duty, SMCR, operational resilience, custody/safeguarding, conduct, outsourcing, and market abuse are either already being shaped or are expected to fall within the new FSMA framework. In short: FSMA is not “more compliance” - it’s an operating model shift.
New Roles, New Pressures
As a result, FSMA ready crypto firms are already identifying the need for new senior management functions, expanded risk and compliance leadership and specialist roles across Prudential Risk, Custody/Safeguarding, Market Abuse, Enterprise Risk, and Consumer Duty.
Critically, accountability must be distributed. Over reliance on an MLRO creates bottlenecks and regulatory risk. Firms that plan effectively are building layered structures with clearly defined ownership across senior managers and subject matter experts.
A Tight Talent Market
This transition is happening in a competitive hiring landscape. We are already seeing strong demand for leaders who understand both crypto and mainstream UK regulatory frameworks. Compliance and risk professionals who understand both are scarce. FCA authorisation experience is highly sought after, and competition for experienced leaders will intensify.
Timing matters. While full authorisation is still some way off, senior hires and interim specialists to resolve legacy issues, are already being secured. Firms that delay risk facing talent shortages, inflated costs, and gaps at critical stages of the authorisation journey.
Looking Ahead
FSMA represents a defining moment for the UK crypto sector. Firms that plan early - investing now in people, governance and structure - will be best placed to secure authorisation and compete in a regulated market.
As Quentin notes: “The sooner you plan for FSMA, the stronger your risk and compliance foundation and the smoother your authorisation journey.”
If you’d like to discuss what FSMA readiness means for your organisation and how ‘Twenty84 powered by Butler Rose’ can help, contact Quentin Downes at [email protected]