UK Moves to Regulate Crypto, Eyes Closer US Ties Amid Industry Scrutiny

The UK government has unveiled draft legislation to establish a comprehensive regulatory regime for cryptoassets, signaling a significant step towards formal oversight of the sector.

Finance Minister Rachel Reeves announced the move at a UK Fintech Week event on Tuesday, emphasizing a dual goal: fostering responsible innovation and clamping down on illicit activities within the digital asset space, the UK Treasury said.

The proposed rules will subject crypto exchanges, dealers, and agents operating in the UK to standards mirroring those in traditional finance, focusing on transparency, consumer protection, and operational resilience. The implications for crypto firms operating in or targeting the UK market could be substantial, potentially leading to increased compliance costs but also greater clarity and legitimacy.

Significantly, Reeves also indicated a strong desire for closer regulatory collaboration with the United States on crypto. This partnership aims to facilitate the "responsible" growth of the digital asset market, leveraging the insights and approaches of both nations.

"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," Rachel Reeves, Chancellor of the Exchequer, said in a statement.

While the government frames the legislation as supportive of innovation, the UK's financial watchdog, the Financial Conduct Authority (FCA), has faced criticism from within the crypto industry for being overly cautious in approving registrations for digital asset firms under existing money laundering regulations. The new framework will likely reshape the registration process and ongoing compliance requirements.

According to consumer research by the FCA, around 12% of UK adults owned crypto in 2024, up from 4% in 2021.