UK’s 2027 crypto rules let firms remove trust protection from Bitcoin lent for yield
UK crypto firms can apply for FCA authorization from Sept. 30, but the new rules are not expected to take effect until Oct. 25, 2027. They distinguish Bitcoin pledged as collateral for qualifying retail borrowing from coins transferred into lending for yield. Borrowing collateral must generally remain safeguarded, with ownership transfer allowed only under a narrow, expressly agreed debt-discharge exception. Qualifying lending may be exempt from the trust requirement while the service continues, leaving customers’ recovery claims dependent on contract terms and insolvency treatment. Safeguarding can strengthen a claim but does not guarantee full repayment if assets are missing. Authorization will not make these crypto services eligible for FSCS compensation, though eligible complaints may be considered by the Financial Ombudsman Service.
