The UK government has published draft legislation that will bring crypto asset firms—including crypto exchanges, custody providers, and brokers—under the scope of UK financial regulation for the first time. Announced by the Chancellor during UK Fintech Week, this move marks a significant milestone in the regulation of digital assets and crypto-related services.
If approved, these new crypto asset rules will apply to any firm offering crypto services to UK customers, regardless of whether the business is based in the UK or overseas. The draft law introduces defined standards around transparency, customer protection, and operational resilience—aligning crypto firms more closely with traditional financial services regulation.
Why the UK Is Regulating Crypto Assets
This legislation follows a 2023 UK Treasury consultation and forms part of the government’s broader Plan for Change to foster innovation in financial technology while protecting consumers. By creating a secure and stable crypto environment, the government hopes to establish the UK as a global hub for digital finance.
According to FCA data, crypto ownership in the UK has surged. Approximately 12% of UK adults have owned or currently own crypto assets, compared to just 4% in 2021. This rapid growth, coupled with crypto scams and market instability, has driven the need for a clearer regulatory framework for crypto assets.
What Crypto Firms Need to Prepare For
Under the proposed UK crypto regulation, crypto asset firms serving UK clients will be expected to:
- Meet transparency and disclosure requirements
- Ensure consumer protection practices are in place
- Demonstrate operational resilience and compliance capabilities
- Potentially register with or come under oversight by the Financial Conduct Authority (FCA)
These compliance requirements could apply to both domestic and international crypto firms operating in the UK market.
Focus on International Crypto Regulation
The Chancellor also revealed plans to collaborate more closely with US regulators to explore a potential “transatlantic sandbox” for digital asset innovation. This initiative would support cross-border cooperation and regulatory alignment in the crypto and digital securities sectors.
What’s Next for UK Crypto Regulation?
The UK government is currently seeking feedback on the draft crypto asset legislation before finalising the new rules. Additionally, a new Financial Services Growth and Competitiveness Strategy will be published on 15 July, aligned with the Chancellor’s Mansion House speech. The strategy aims to support long-term growth and competitiveness in the UK’s financial services sector, including the evolving crypto industry.
Final Thoughts
These upcoming changes represent a significant shift in how crypto businesses operate in the UK. Any firm offering crypto asset services, or considering entering the UK market, should begin preparing for potential regulatory oversight, new compliance obligations, and closer scrutiny by the FCA. For full details on the announcement, visit the official government release here: UK Crypto Asset Rules to Drive Growth and Protect Consumers