The United Kingdom’s cryptocurrency industry must brace for a more stringent regulatory environment within the next year, according to a senior official at the country’s Financial Conduct Authority (FCA).

Matthew Long, FCA’s director of payments and digital assets, revealed in an interview that a new authorization regime for crypto companies, known as the “impending gateway regime,” is set to be implemented in 2026. This will require firms like Coinbase, Gemini, and Bitpanda to undergo a fresh approval process with the FCA, moving away from just registering to comply with anti-money laundering rules.

The FCA is expected to release papers on stablecoins, trading platforms, staking, prudential crypto exposure, and more this year, leading up to the regime’s anticipated launch in 2026. Since the launch of the anti-money laundering register for firms in 2020, the FCA has received 368 applications but only approved 50 firms, prompting many to potentially restart the application process.

Upcoming legislation will define regulated activities in the cryptocurrency sector, including issuance of stablecoins, payment, exchange, and lending activities. The FCA plans to consult on draft rules for stablecoins and adapt existing regulations to accommodate the unique nature of stablecoins.

The transition to the new authorization regime will involve a lengthy registration process, even for firms with existing licenses. The FCA is still finalizing the specific steps needed for crypto companies to obtain authorization but intends to communicate this information to firms before the regime goes live.

The FCA will also consider regulations in Europe and recommendations from the International Organization of Securities Commissions (IOSCO) to ensure best practices are implemented in the UK cryptocurrency sector.

Overall, the UK’s crypto industry is facing significant regulatory changes in the coming years, and companies will need to prepare for a more rigorous authorization process to comply with the new regime.