# U.K. Crypto Rules Split Yield Lending From Bitcoin Collateral

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/25921
Published: 2026-09-30T17:31:37.000Z
Updated: 2026-09-30T17:31:37.000Z
Section: Regulation

> Applications opened Sept. 30, with the regime expected to begin Oct. 25, 2027. Firms must apply by Feb. 28, 2027, but filing does not grant authorization.

The U.K.'s Financial Conduct Authority opened applications for a crypto regime that treats yield lending differently from Bitcoin collateral, changing how customer assets are protected.

The application window opened Sept. 30, 2026, and is scheduled to close Feb. 28, 2027. The wider framework is expected to take effect Oct. 25, 2027, but submitting an application does not give a firm authorization.

Under the finalized rules, a firm operating a qualifying cryptoasset lending service may stop classifying the related assets as client assets for as long as that service remains active. The exemption ends when the arrangement ends, including after a customer exercises a termination right.

The rules separate assets pledged to secure borrowing from assets delivered to a lender in pursuit of yield. Cryptoassets used as qualifying borrowing collateral remain subject to safeguarding requirements unless the rules’ conditions for transferring ownership to settle a debt are satisfied.

That distinction may shape customer claims if a platform becomes insolvent. Assets covered by a safeguarding trust may be protected from competing claims, while customers who transfer assets into a lending service may instead hold a contractual claim for the return of the same or equivalent assets.

A trust arrangement is formed through private legal agreements and does not automatically create a statutory trust. It also cannot ensure that enough assets remain to meet every customer claim after losses or costs.

The new regulated activities will not receive Financial Services Compensation Scheme coverage for investment losses. Retail protections will remain in place for lending and borrowing, including disclosures, customer consent, appropriateness testing, record-keeping, over-collateralization and negative-balance protection.

The rules cover specific regulated services and do not extend borrowing-collateral protections to every cash loan secured by Bitcoin or another cryptoasset. Firms must submit applications by Feb. 28, 2027, ahead of the expected Oct. 25, 2027, start date.