UK Moves to Rein In Crypto With Major Regulation Push
The law responds to a threefold increase in crypto adoption in the UK since 2021—now 12% of adults hold digital assets, up from 4%.
New Legal Framework Targets Exchanges and Stablecoin Issuers
The legislation will require crypto firms—including custodians, brokers, and trading platforms—to meet strict rules on transparency, security, and consumer protection, similar to traditional finance. For the first time, exchanges and intermediaries will be brought under UK regulatory supervision, giving the Financial Conduct Authority (FCA) expanded powers.
The proposed laws define regulated crypto activities, including:
- Operating a crypto trading platform.
- Issuing stablecoins within the UK.
- Safeguarding digital assets for clients.
- Providing staking, lending, or trading services.
Importantly, the rules will apply to overseas firms serving UK consumers, even if they are not physically based in the country.
Stablecoins and DeFi Also in the Crosshairs
The framework includes stablecoins backed by fiat or assets, though they won’t yet be regulated under existing payment laws. It also addresses DeFi, with the FCA expected to evaluate if protocols have centralized oversight—in which case, they may fall under regulation. A transitional period will give existing firms time to apply for FCA authorization or wind down operations if they fail to meet requirements.
Transatlantic Crypto Alignment in Progress
Beyond domestic policy, the UK is seeking global coordination. Chancellor Reeves confirmed ongoing talks with US Treasury Secretary Scott Bessent under the UK-US Financial Regulatory Working Group. SEC Commissioner Hester Peirce’s proposal for a transatlantic sandbox is gaining traction, aimed at helping firms on both sides co-develop digital securities solutions. The UK plans to publish its Financial Services Growth and Competitiveness Strategy on July 15, with fintech and crypto listed as top priorities.
