The UK government has published draft legislation that would bring cryptoasset services such as exchanges, brokers and custody providers within the scope of financial regulation for the first time. The announcement was made by the Chancellor during a major summit in London as part of UK Fintech Week.
If passed, the rules will apply to firms offering crypto-related services to UK customers - whether based in the UK or overseas. These businesses would be required to meet defined standards around transparency, customer protection, and operational resilience, similar to those in traditional financial services.
The legislation follows a 2023 Treasury consultation, and forms part of the government’s wider "Plan for Change" strategy aimed at supporting innovation in financial services. The goal is to create a more stable and secure environment for consumers, while ensuring the UK remains a centre for digital finance.
Background and Impact
- According to Financial Conduct Authority (FCA) research, around 12% of UK adults currently own or have owned cryptoassets - a sharp increase from 4% in 2021. While crypto adoption has grown, the sector has also seen high-profile failures and scams, which has naturally raised concerns.
- In practical terms, crypto businesses targeting UK customers will likely face new compliance requirements and potential oversight from regulators like the FCA.
International Cooperation
- The Chancellor also noted plans for further engagement with US regulators, including discussions on a potential “transatlantic sandbox” to explore cross-border approaches to digital securities. This follows meetings in Washington between UK and US officials earlier this year.
What’s Next?
- The government is seeking feedback on the draft legislation before introducing final measures. The Chancellor also announced that the government will be publishing a Financial Services Growth and Competitiveness Strategy on 15 July alongside the Chancellor’s Mansion House speech. This has the aim of supporting long term growth in the financial services sector.
- The regulatory shift is significant for any business involved in or considering entry into the crypto space.
For more info: https://www.gov.uk/government/news/new-cryptoasset-rules-to-drive-growth-and-protect-consumers