- The UK government has unveiled draft legislation to regulate cryptoasset firms, aiming to enhance investor confidence and consumer protection
- The proposed rules bring crypto exchanges, dealers, and agents within the regulatory framework, aligning them with standards applied to traditional financial institutions
- The legislation is part of the government’s broader ‘Plan for Change’ strategy to foster innovation while ensuring financial stability. ([UK plans new rules to tighten oversight of crypto sector
In a move to regulate the burgeoning cryptocurrency sector, the UK government has introduced draft legislation that seeks to bring cryptoasset firms under a comprehensive regulatory framework. This initiative aims to bolster investor confidence, protect consumers, and support the growth of fintech in the UK. The proposed rules will subject crypto exchanges, dealers, and agents to standards akin to those governing traditional financial services.
Increase in Transparency Demanded
The draft legislation mandates that crypto firms operating in the UK adhere to stringent standards on transparency, consumer protection, and operational resilience. This move is designed to crack down on fraudulent activities while fostering legitimate innovation within the sector.
In a press release announcing the draft laws, Chancellor Rachel Reeves emphasized the government’s commitment to safe crypto use:
Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.
The Financial Conduct Authority (FCA) will oversee the implementation of these regulations, ensuring that crypto firms meet the necessary requirements to operate within the UK. The government plans to finalize the legislation after a period of industry consultation, aiming to bring the final version forward at the “earliest opportunity.”
Capitalizing on a Growing Market
The UK’s move comes amid a significant rise in crypto ownership among its citizens. According to research by the FCA, around 12% of UK adults now own or have owned cryptoassets, up from just 4% in 2021. This surge underscores the need for a robust regulatory framework to protect consumers and ensure market integrity.
The proposed regulations also align with international efforts to regulate the crypto market. Chancellor Reeves recently discussed crypto regulation with U.S. Treasury Secretary Scott Bessent, highlighting the importance of cross-border collaboration in overseeing digital assets. The UK and US plan to continue engagement through the upcoming UK – U.S. Financial Regulatory Working Group.
As the UK positions itself as a global hub for digital asset technologies, the introduction of these regulations marks a pivotal step in balancing innovation with consumer protection. The government’s forthcoming Financial Services Growth and Competitiveness Strategy, set to be published on 15 July, will further outline plans to support the financial services sector’s long-term growth, with fintech identified as a priority sector.
