I was reading about UK crypto regulation the other day and wanted to check I have understood it properly, because most of what I find is either a legal firm’s sales pitch or a news piece that changes with every announcement. Here is what I have pieced together, and I would appreciate anyone correcting me.

The starting point seems to be that crypto businesses have to register with the FCA for anti-money laundering purposes under the Money Laundering Regulations, and that the registration process has a reputation for being slow and demanding, with many applications refused or withdrawn. Beyond that, the UK government has been building a wider regime that would bring activities such as operating exchanges, custody, issuing and staking into the regulatory perimeter, with stablecoins treated as a separate area. I am unsure what is already in force and what is still at consultation or draft stage, so I would like to know where things stand now.

The financial promotions rules look like another trap. Since October 2023, promoting cryptoassets to UK consumers generally needs to go through an FCA authorised firm or meet an exemption, with risk warnings, cooling-off periods and restrictions on incentives such as refer-a-friend bonuses. I keep seeing that even marketing on social media or through influencers can fall within the rules, and that breaches can lead to enforcement. Tax also seems to matter, with HMRC treating crypto gains as capital gains in most cases and with reporting requirements for platforms. I am not sure how the Travel Rule, sanctions screening and the Consumer Duty fit in, or which of them apply to a small team.

My question is how founders work out which parts of the regime apply to their model, whether that is a wallet, an exchange, a payments product or a token project, and how long FCA registration realistically took. I would also like to know what compliance cost in time and money, how people found banks willing to open an account for a crypto company, and whether SEIS or EIS were available given the trade exclusions. I have read something similar to this on Entrepreneur Plus, so I would like to hear from anyone who has gone through it, what they found hardest, and whether anything caused friction with the FCA or during a later raise.