The UK government has unveiled comprehensive draft legislation aimed at regulating cryptocurrency exchanges, dealers, and agents.
Announced by Chancellor of the Exchequer Rachel Reeves during UK Fintech Week, the proposed rules aim to enhance consumer protection, boost investor confidence, and promote innovation within the growing crypto industry.
Under the new framework, crypto firms operating in the UK will be required to adhere to stringent standards on transparency, consumer protection, and operational resilience, aligning them with the regulatory expectations of traditional financial institutions.
This move comes in response to the rapid rise in crypto adoption across the UK, where approximately 12% of adults have engaged with cryptocurrencies, up from 4% in 2021.
The legislation also extends its reach to overseas firms offering services to UK retail clients, ensuring that any business dealing directly or indirectly with UK consumers secures appropriate authorization from the Financial Conduct Authority.
This includes operations such as crypto asset trading platforms, stablecoin issuance, custody services, and staking activities.
“This is a massive year for crypto in the UK,” said Keith Grose, head of UK at Coinbase, speaking to CNBC. “The FCA and the Bank of England are rolling out their crypto regulation regime this year … this is the year for the UK to show that it can lead from the front.”
US and UK cooperation
In a bid to address the global nature of digital assets, the UK is strengthening its international regulatory ties, particularly with the United States. Chancellor Reeves recently met with U.S. Treasury Secretary Scott Bessent in Washington, D.C., where they discussed collaboration on digital asset regulation.
The discussions included proposals from U.S. SEC Commissioner Hester Peirce for a transatlantic regulatory sandbox, aimed at allowing firms on both sides of the Atlantic to develop compliant digital securities solutions collaboratively.
This transatlantic cooperation is set to continue through the UK–U.S. Financial Regulatory Working Group, with the next meeting scheduled to further explore ways to support the responsible growth of digital assets.
The UK government’s proactive approach reflects its commitment to making Britain a global hub for fintech and responsible digital asset innovation.
‘Plan for Change’
The draft legislation is part of the government’s broader “Plan for Change” agenda, which aims to drive growth and innovation across the UK’s financial services sector.
Grose said there are two major hurdles the UK must overcome to make crypto competitive: de-banking and regulation. “Fifty percent of crypto firms have been denied a bank account in the UK or been offboarded… You can’t build the future of the financial system here if we don’t have that level playing field.”
The final crypto legislation is expected to be introduced following industry consultation on the draft provisions, with the government planning to publish its first Financial Services Growth and Competitiveness Strategy on July 15.
As the UK positions itself at the forefront of digital asset regulation, these developments signify a concerted effort to balance innovation with consumer protection, ensuring that the crypto industry can thrive within a secure and well-regulated environment.
