The United Kingdom has recently unveiled draft legislation aimed at creating regulatory clarity within the crypto industry. This move reflects a growing global trend to bring clarity and oversight to the sector while attempting to strike a balance between fostering innovation and ensuring consumer protection. The UK's regulatory proposal, announced last month, is particularly notable for its ‘‘collaborative tone’’ with U.S. counterparts and its targeted approach to market actors.

An official announcement was made by the HM Treasury on gov.uk, mentioning the draft of the new provisions. Read further here

New Regulatory Measures: Expanding the Perimeter
The drafted UK legislation seeks to bring crypto exchanges, custodians, and other service providers under the umbrella of existing financial services regulations.

Some key elements include:

• Regulatory Inclusion: Crypto exchanges and dealers will be subject to rules similar to those governing traditional financial firms, such as anti-money laundering (AML) and know-your-customer (KYC) requirements.
• Stablecoin Treatment: Overseas issuers of stablecoins will be exempt from certain operational requirements, provided their coins are used primarily outside the UK.
• Consumer Protections: The draft rules emphasize safeguards for retail investors, including transparency standards and conduct requirements for crypto firms.

The roadmap below goes into further detail for those who are interested in seeing the bigger picture.

FCA Crypto Roadmap timeline

A consumer research report by the UK’s Financial Conduct Authority (FCA), displaying that the proportion of UK adults holding cryptocurrency rose to approximately 12% in 2024, a significant increase from 4% in 2021.

Is the UK following in the footsteps of the United States?
According to a joint statement cited in a report by CNBC, Chancellor Rachel Reeves announced that the UK plans to deepen regulatory cooperation with the United States to promote the responsible adoption of digital assets. This is a step toward aligning regulatory frameworks and fostering international collaboration in the crypto sector. While specific joint actions have yet to be detailed, the emphasis on cooperation points to a broader strategy of cross-border regulatory consistency and shared innovation goals.

Rachel Reeves, Chancellor of the Exchequer in the United Kingdom from July of last year.

According to Reeves: “For the UK to be a world leader in digital assets, international co-operation is vital.”

To Conclude: A Defining Moment for Global Crypto Policy
The UK’s draft crypto legislation can be seen as an inevitable step in formalizing digital asset regulation within a leading financial jurisdiction. While the rules are still subject to consultation and adjustment, they reflect a clear intention to legitimize and integrate crypto within the broader financial system. This is all part of the current roadmap that was put forth in 2024. As per a report by PwC, the UK government is on track to have a full framework on digital assets in 2026.

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