FCA authorisation: the financial and prudential workstream
The UK's new cryptoasset regime brings cryptoasset firms and stablecoin issuers within the FCA's authorisation and prudential framework, with the application window closing on 28 February 2027. Applications are assessed as much on the credibility of a firm's financial projections and capital position as on its policies and procedures. We prepare the financial projections, own funds and liquidity assessments, stress testing and wind-down planning that underpin a complete application.
Who the regime affects
FCA authorisation will be required by any firm carrying on the new regulated cryptoasset activities in, or into, the UK. These include, among others, operating a cryptoasset trading platform, dealing and arranging deals in cryptoassets, staking and issuing qualifying stablecoins. The firms we support include, for example:
Firms currently registered under the MLRs
Registration under the Money Laundering Regulations does not convert into authorisation. Registered firms will require full FCA authorisation to continue operating beyond October 2027.
Stablecoin issuers
Issuers face issuer-specific capital and liquidity requirements, alongside modelling of the backing asset pool and redemption arrangements.
Firms serving UK customers from overseas
Firms based outside the UK will need FCA authorisation for their UK business, typically through a UK entity with its own capital, liquidity and wind-down arrangements.
Firms extending existing permissions
Firms already authorised by the FCA that intend to add cryptoasset activities to their existing permissions, including investment firms subject to MIFIDPRU.
This is not an exhaustive list. Whether a firm's activities fall within scope is ultimately a legal determination; where scope is uncertain, we work alongside the firm's legal advisers to assess the financial and prudential implications.
Scope of our support
Delivered as a single, integrated financial model, consistent with the firm's regulatory business plan and capable of supporting the firm beyond authorisation.
Application stage
- Driver-based three-year financial projections and projected financial statements, reconciled to management accounts and consistent with the regulatory business plan
- Own funds requirement calculations under COREPRU and CRYPTOPRU, covering the permanent minimum, fixed overheads requirement and K-factor requirements
- Liquidity assessment, including basic and issuer liquid asset requirements
- Stress testing and reverse stress testing, with early warning indicators and recovery actions
- Costed wind-down planning and the associated threshold requirements
- Assessment of the capital structure and the eligibility of instruments as own funds
- For stablecoin issuers: modelling of the backing asset pool, redemption stress scenarios and income on backing assets
Post-authorisation
- Ongoing monitoring of capital and liquidity against internal thresholds and early warning indicators
- Regulatory reporting calendar and preparation of prudential returns
- Annual refresh of the overall risk assessment
- Board-level management information
Common areas of regulatory challenge
Delays at the assessment stage frequently arise from the financial elements of an application. Three issues recur.
Projections that are inconsistent with the business plan
The FCA assesses financial projections against the firm's regulatory business plan, resourcing and governance arrangements. Inconsistencies between them are likely to prompt further information requests and extend the assessment period.
Capital that does not qualify as own funds
Instruments such as convertible loan notes, and items such as intangible assets and holdings of the firm's own tokens, are typically excluded from, or deducted in calculating, own funds. Firms may hold less eligible capital than their balance sheet suggests.
Wind-down plans that are not quantified
A credible wind-down plan requires a costed, month-by-month model of an orderly exit, run from a stressed starting position. A narrative plan alone is unlikely to be sufficient.
Our approach
Capital diagnostic
A fixed-fee assessment of the firm's capital and liquidity requirements against its current resources and runway, identifying any shortfall early. The fee is credited in full against the subsequent engagement.
Application finance pack
Preparation of the financial projections, prudential calculations, stress testing and wind-down plan as a single integrated model, ready for submission with the application.
Ongoing prudential finance
Following authorisation, we operate the finance function in line with the firm's prudential obligations through our Controller or CFO engagement.
Working alongside legal and compliance advisers
On authorisation projects, we work alongside gunnercooke's regulatory lawyers to provide a combined legal and financial offering. Where a firm has appointed its own legal and compliance advisers, we deliver the financial workstream as a standalone pack, coordinated with their work.
Plan the financial workstream early
Preparing a robust financial submission takes time. An initial call will establish the scope of the work and a timetable to the application deadline.
Book a 20-minute callLudgate Advisors prepares financial information in support of applications to the Financial Conduct Authority. Authorisation decisions are made solely by the Financial Conduct Authority. Responsibility for the application, its contents and its submission rests with the applicant firm and its board.