Government in the UK Unveils Proposed Cryptocurrency Regulations to Spur Growth, Safeguard Investors
New Draft Bill: UK Tightens Cryptocurrency Regulation
The UK government recently unveiled a comprehensive draft bill aimed at establishing clear regulations for the cryptocurrency industry. This new legislation intends to bolster investor confidence and protect consumers.
A 27-page draft document, Order 2025 of the Financial Services and Market Act 2000, along with a policy explainer, introduces new definitions for crypto assets, such as stablecoins, and brings acts like custodying crypto assets and operating crypto exchanges under regulatory oversight.
"With our Plan for Change, we're making the UK the ideal hub for innovation – and the safest place for consumers," said UK Chancellor of the Exchequer Rachel Reeves, in a statement. "Strict rules on crypto will boost investor confidence, promote fintech growth, and safeguard the public."
The draft, public for assessment of omissions or errors, proposes amendments to select orders of the Financial Services and Market Act, including Order 2001, which outlines regulated activities.
Modifications to the Regulated Activities Order (RAO) seek to define qualifying stablecoins and crypto assets as specified investments, subject to regulation. "Under these new rules, crypto exchanges, dealers, and agents will be brought under regulatory supervision, targeting illicit actors while nurturing legitimate innovation," the statement from His Majesty's Treasury and Reeves reads.
"Crypto companies with UK customers must meet clear standards on transparency, consumer protection, and operational resilience – just like traditional finance firms," it continues.
The latest draft legislation follows discussions between Reeves and U.S. Treasury Secretary Janet Yellen, focusing on "greater coordination on digital securities between the UK and U.S." in addition to other topics.
In 2023, a UK Treasury consultation detailed potential crypto asset regulation proposals, including stablecoins. Last November, the government confirmed its intentions to implement these proposals, and today's announcement indicates they "will introduce final crypto asset legislation at the earliest opportunity, following feedback on the draft provisions from industry."
The UK introduced a new crime bill in February expanding powers for crypto seizures.
As of August 2024, approximately 12% of UK citizens owned crypto, compared to 4% in 2021, according to research from its Financial Conduct Authority.
The UK's new regulatory framework will primarily affect the Regulated Activities Order (RAO) under the Financial Services and Markets Act 2000, expanding the liability of entities offering crypto services, including operating a cryptoasset trading exchange, providing custody services, and issuing stablecoins. These entities must comply with standards commensurate with traditional finance, covering transparency, consumer protection, and operational resilience.
The draft is open for feedback until May 23, 2025, with the government planning to pass the new regulations swiftly following consultation. The aim is to balance consumer protection with crypto innovation, gradually treating crypto services as standard financial activities.
- The UK government's draft bill aims to establish clear regulations for the cryptocurrency industry, including Bitcoin and other cryptocurrencies.
- The legislation, titled Order 2025 of the Financial Services and Market Act 2000, introduces new definitions for crypto assets like stablecoins and brings acts like custodying crypto assets and operating crypto exchanges under regulatory oversight.
- The draft bill also seeks to define qualifying stablecoins and crypto assets as specified investments, subject to regulation, under the modified Regulated Activities Order (RAO).
- Crypto exchanges, dealers, and agents will be brought under regulatory supervision to target illicit actors while promoting legitimate innovation, as stated in the document from His Majesty's Treasury and UK Chancellor of the Exchequer Rachel Reeves.
- Crypto companies with UK customers will be required to meet clear standards on transparency, consumer protection, and operational resilience, just like traditional finance firms.
- The UK's new regulatory framework will primarily affect the RAO under the Financial Services and Markets Act 2000, expanding the liability of entities offering crypto services.
- In 2023, the UK government proposed potential crypto asset regulation, including stablecoins, and confirmed its intentions to implement these proposals in 2023.
- The UK introduced a new crime bill in February 2023, expanding powers for crypto seizures, in addition to the upcoming regulations aimed at crypto innovation and consumer protection.
