The UK tightens its grip on crypto: new rules aim to bring Bitcoin and digital assets under stricter regulation.
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The UK is preparing to bring the fast-moving world of cryptocurrency under formal financial regulation for the first time, as Chancellor Rachel Reeves announced plans this week to clamp down on dodgy players while supporting innovation in the sector.
The move signals a clear pivot towards the US model of crypto oversight, distancing Britain from the more crypto-specific approach taken by the EU.
Under the new draft legislation, crypto exchanges, trading platforms and related firms operating in the UK will be subject to tougher rules on transparency, consumer protection and operational resilience — much like traditional financial institutions.
UK aligns with US on crypto rules, diverges from EU approach
Speaking after a visit to Washington, Reeves confirmed that the UK would coordinate closely with the United States on crypto regulation, having already discussed the matter with US Treasury Secretary Scott Bessent. More talks are expected in June.
“We’re making it clear that the UK is not going to be a safe haven for bad actors in the crypto space,” Reeves said.
The rules also clarify that crypto firms dealing with UK customers will need to meet defined standards, regardless of where they’re based. That includes being able to withstand shocks, protect user data and safeguard client funds.
By contrast, the EU’s MiCAR framework takes a more bespoke approach to the sector, with regulations tailored to different types of tokens and service providers. Experts say Britain’s decision to mirror the US stance — treating crypto more like mainstream securities — will create a more predictable legal environment for companies, but may also increase barriers for newcomers.
UK to regulate stablecoins — but only for domestic issuers
The new rules also outline plans to regulate stablecoins, a type of cryptocurrency that aims to maintain a fixed value (usually pegged to a currency like the US dollar). But only those issued by UK-based firms will be subject to the upcoming legislation.
That might leave room for international stablecoin providers to continue operating with less oversight, at least in the short term.
Bank of England Governor Andrew Bailey has long been a critic of crypto, warning that assets like bitcoin are risky and volatile, and should not be considered a reliable store of value. However, he has shown more willingness to engage with stablecoins, which he sees as potentially useful — provided they are properly regulated.
Crypto adoption rises in UK amid investor protection concerns
Crypto ownership in the UK has jumped significantly, with 12% of adults now holding or having held cryptocurrencies, up from just 4% in 2021. That growth has sparked concerns over consumer protection, particularly with speculative tokens that may have little or no intrinsic value.
Some critics warn that bringing crypto under the regulatory umbrella may legitimise an inherently risky space, and give investors a false sense of security.
Still, many in the financial sector have welcomed the clarity. Nick Price, a crypto law expert at Osborne Clarke, called the legislation “straightforward” and said it would bring “much-needed certainty and protection” to the market.
Simon Treacy, a financial services lawyer at Linklaters, noted that the new law defines which assets and activities will be regulated — but stressed that finer details would be worked out later by UK regulators as the framework is built out.
UK financial sector reforms: What’s coming next
Chancellor Reeves also revealed that she’ll outline her long-term vision for the financial services industry in her upcoming Mansion House speech on 15 July — a major political moment in the UK’s economic calendar.
That speech, she said, will build on months of consultation and is expected to address the balance between innovation and risk in post-Brexit financial markets. Last year, Reeves had suggested that regulators may have gone too far in limiting risk since the 2008 financial crisis.
Bottom line? The UK is no longer sitting on the fence. By falling in step with the US on crypto, the government hopes to support innovation while cracking down on the worst of the wild west behaviour — all without going down the EU’s more complex regulatory path.
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