(3 min read)
The UK's new cryptoasset regime will require authorised firms to hold sufficient regulatory capital from day one, with requirements increasing as businesses grow. In practice, capital is not just a compliance requirement. It can determine how quickly a firm is able to scale and is a core component of the FCA authorisation process. This guide explains how capital requirements are calculated under the new framework, what forms of funding qualify as regulatory capital, and why common venture-backed funding structures can create challenges. Covering PMRs, fixed overhead requirements, K-factors and capital composition rules, it provides a practical overview of one of the most important foundations for authorisation, growth and long-term regulatory compliance.
The UK’s new cryptoasset regime takes effect on 25 October 2027. Newly authorised firms will need to hold eligible regulatory capital (i.e., own funds), under the FCA’s new prudential sourcebooks, COREPRU and CRYPTOPRU.
Regulatory capital requirements scale with your business, so a lack of appropriate capital will act as a restriction on the growth of your business. It should therefore be a foundational element of your business planning, and is a core component of the regulatory business plan you need as part of the FCA authorisation. The rules are complex, and we recommend taking specialist advice early in the process.
For cryptoasset firms, the aim of regulatory capital is to protect clients and markets by absorbing losses, and allow a distressed business to wind-down in an orderly way without affecting either.
In this guide we explain:
1. what is regulatory capital for;
2. what instruments are eligible; and
3. how the requirements for a cryptoasset firm are calculated.
Whether you're preparing for FCA authorisation, raising investment or scaling your business, understanding regulatory capital will be critical. Download our guide to explore the new rules and their implications for cryptoasset firms.
Read the guide here.
Ready to take the next step?
The earlier regulatory capital issues are identified, the more options firms have to address them. If you have any questions about the new regime or would like to discuss how your business can prepare, please get in touch with our specialist team. We would be delighted to help.
