The UK government has proposed draft legislation to regulate cryptocurrencies like Bitcoin, aiming to protect consumers and enhance investor confidence. The framework mandates that crypto firms meet transparency and operational standards akin to those for traditional financial institutions. Additionally, the UK seeks to collaborate with the US in regulating digital assets, further supporting responsible innovation in the sector.
The UK government has announced a draft legislation to regulate cryptocurrencies like Bitcoin and Ethereum, with a distinct focus on consumer protection and bolstering investor confidence as the adoption of these digital assets surges. This announcement, made by Chancellor Rachel Reeves during UK Fintech Week, is part of a broader initiative known as the Plan for Change, aiming to establish Britain as a leading hub for fintech and responsible innovation in the digital asset sphere.
Under the proposed regulatory framework, firms that provide services such as crypto exchanges, custody, and brokerage will be required to meet stringent standards. These rules are aimed at ensuring transparency, consumer protection, and operational resilience, mirroring the expectations placed on traditional financial institutions. As Reeves stated, the purpose is to create an environment where innovation can thrive while maintaining a robust safety net for consumers.
The new legislation is a response to a significant rise in cryptocurrency ownership among UK adults, where the figure has jumped from 4% in 2021 to 12% now. However, this increase has also highlighted a growing concern — many consumers are falling victim to unregulated platforms and scams. By putting intermediaries handling digital assets under formal regulatory oversight, the government aims to give regulators the necessary tools to combat this issue effectively.
In an effort to enhance international regulatory relations, the UK is also seeking to solidify its cooperation with the US. Chancellor Reeves noted talks held with US Treasury Secretary Scott Bessent, which explored the potential for a transatlantic regulatory sandbox. This initiative would facilitate collaboration for firms across both countries aiming to develop compliant digital securities solutions. Such cooperation could play a vital role in harmonising global standards and promoting responsible innovation in the digital assets sector.
Looking ahead, the UK government is set to publish its inaugural Financial Services Growth and Competitiveness Strategy by July 15, underlining fintech as a priority area for growth. Following consultations with industry stakeholders regarding the draft plans, the final version of the crypto legislation is expected to be submitted at the earliest opportunity, reinforcing the UK’s commitment to a comprehensive regulatory landscape for digital assets.
