U.K. unveils plans to regulate cryptocurrency industry comprehensively
- The U.K. revealed new draft rules to regulate the cryptocurrency sector, focusing on bringing exchanges and dealers under oversight.
- Finance Minister Rachel Reeves highlighted the necessity for international cooperation with the U.S. to ensure responsible cryptocurrency adoption.
- Concerns have been raised by industry leaders about the restrictive nature of current regulations, which could drive innovation to other regions.
On April 29, 2025, the U.K. Treasury introduced draft legislation aimed at establishing a regulatory framework for the cryptocurrency sector. This initiative, announced by Finance Minister Rachel Reeves at a fintech event, is intended to bring crypto exchanges, dealers, and agents under regulatory supervision, which is aimed at promoting legitimate innovation while simultaneously cracking down on fraudulent activities. Reeves emphasized the necessity for the U.K. to become a global leader in digital assets by enhancing cooperation with international partners, particularly the U.S., in supporting the responsible use of digital currencies. Despite the announcement of this new regulatory approach, there are concerns within the crypto industry regarding the current regulatory environment in the U.K. Several representatives, including Coinbase’s U.K. head Keith Grose, voiced apprehension that overly restrictive practices from the Financial Conduct Authority (FCA) have inhibited progress and innovation in the sector. The FCA, which manages registrations under money laundering regulations, has been criticized for creating an unwelcoming atmosphere that may lead companies to seek opportunities in more favorable jurisdictions. Industry executives have pointed out that many startups in the U.K. are facing challenges, such as difficulties in securing funding and bank accounts, which are essential for operational success. A survey conducted in January indicated that half of the crypto firms experienced difficulties due to being denied banking services, illustrating a significant barrier to growth. Many prospective entrepreneurs are contemplating launching their projects in regions with more developed regulatory frameworks, such as Asia and the Middle East. The discussion around regulatory clarity extends to stablecoins, which are cryptocurrencies pegged to stable assets. Figures in the industry, like ClearBank’s CEO Mark Fairless, have signaled that without clear regulations, the rollout of new products, including stablecoins, is impossible. The new legislative measures aim to clarify this landscape, ultimately providing the necessary conditions for growth and innovation within the U.K.'s crypto ecosystem.