The Financial Conduct Authority announced on Tuesday the creation of a permanent digital assets track within its long-running regulatory sandbox programme, marking a significant shift in the regulator's approach to crypto and tokenisation innovation. The new track, which opens for applications on 1 June 2025, will allow firms working on blockchain-based financial products to operate under supervised conditions indefinitely, replacing the previous cohort-based model that imposed 12-month testing windows.

FCA executive director of markets and international Sarah Sherwin said the move reflects the regulator's recognition that digital asset businesses often require longer development cycles than traditional fintech firms. "We've listened carefully to industry feedback that the existing sandbox timelines were insufficient for firms building complex distributed ledger infrastructure," she said. "This permanent track will give innovators the certainty they need while maintaining robust consumer protections." The announcement follows a 2024 consultation that received over 340 responses from industry participants.

The Innovate Finance trade body welcomed the announcement, noting that 23 digital asset firms had previously exited the sandbox without achieving full authorisation, in part due to time constraints. Chief executive Janine Sheridan said the permanent track could position the UK as a genuine competitor to Singapore and the UAE for digital asset innovation. However, the FCA stressed that firms on the new track will face enhanced reporting obligations, including quarterly risk assessments and mandatory customer outcome reviews aligned with the Consumer Duty framework.