The UK government has laid out draft legislation to regulate cryptocurrencies, aiming to protect consumers and build investor confidence. The proposed framework requires crypto firms to adhere to transparency and resilience standards similar to traditional finance. Furthermore, the UK is looking to strengthen ties with the US on digital asset regulations, promoting international collaboration.
The UK government has revealed draft legislation targeting the regulation of cryptocurrencies like Bitcoin and Ethereum, aiming to bolster consumer protection and enhance investor trust amid a surge in crypto adoption. This announcement, made by Chancellor Rachel Reeves during UK Fintech Week, is part of a wider initiative called the Plan for Change, which aspires to establish Britain as a leading global centre for fintech and responsible digital asset innovation.
According to the proposed framework, crypto businesses—those providing exchanges, custody, and brokerage of crypto assets—will need to follow strict standards, aligning them with the operational and transparency requirements traditional financial institutions currently adhere to. Chancellor Reeves stated, “Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest for consumers. Robust rules around crypto will boost investor confidence, support fintech growth, and protect UK citizens.”
The necessity for new regulations stems from an alarming increase in crypto ownership; 12% of adults in the UK now hold digital assets, a steep climb from just 4% in 2021. However, this growth has also left many consumers vulnerable to scams and unregulated platforms, underscoring the urgent need for a regulatory framework.
For the first time, the proposed legislation would subject crypto exchanges and intermediaries to UK regulatory oversight, giving authorities the means to eliminate fraudulent entities while promoting responsible innovation with enforceable standards.
Beyond its domestic agenda, the UK government is also focusing on international cooperation in its regulatory approaches. Chancellor Reeves has announced the UK’s collaboration with the US, specifically through the UK-US Financial Regulatory Working Group, to foster responsible growth in digital assets.
This initiative comes on the heels of high-level discussions between Chancellor Reeves and US Treasury Secretary Scott Bessent in Washington, where they examined strategies, including a proposal for a transatlantic regulatory sandbox suggested by US SEC Commissioner Hester Peirce. This sandbox could help firms on both sides of the Atlantic work together in crafting compliant digital securities solutions.
This kind of collaboration is viewed as crucial for aligning international standards and reducing regulatory discrepancies, which can otherwise impede responsible innovation between countries. Looking ahead, the government intends to release its Financial Services Growth and Competitiveness Strategy by July 15, highlighting fintech as a key area of focus. The finalised crypto legislation is expected to be introduced shortly after consultations with industry stakeholders regarding the draft provisions.
