UK Unveils New Crypto Rules to Align Industry with Traditional Finance Standards
The UK government has introduced sweeping draft legislation aimed at integrating cryptocurrency service providers into the country's formal financial regulatory system. Announced during UK Fintech Week by Chancellor Rachel Reeves, the proposal marks a pivotal move to bring clarity and accountability to a sector that has long operated in legal grey zones.
Crypto Firms Face Stricter Oversight Under New Draft Law
The proposed rules, revealed at a major financial summit in London, target exchanges, custodians, and other digital asset firms. These entities will be required to meet rigorous standards around transparency, consumer protection, and operational robustness. The legislation falls under the broader umbrella of the UK’s “Plan for Change,” an initiative that promotes economic modernization while imposing firm guardrails around emerging technologies.
Reeves positioned the legislation as a response to growing concerns about unregulated crypto activities and their potential risks to investors and the broader economy.
Crypto to Be Regulated Like Traditional Finance
Under the new rules, crypto companies serving UK clients must adhere to the same principles of governance, risk management, compliance, and fraud prevention that apply to banks and other financial institutions. This regulatory parity is designed to close gaps that have allowed some crypto operations to escape scrutiny.
With around 12% of UK adults reportedly holding digital assets such as Bitcoin and Ethereum, the government believes regulation is overdue. The draft law would mandate robust protection of user funds and improved transparency from all crypto service providers.
UK and US Explore Joint Crypto Oversight Model
In parallel with its domestic reforms, the UK has launched talks with the United States to explore a unified cross-border regulatory framework for digital assets. Reeves confirmed recent discussions with U.S. Treasury Secretary Scott Bessent in Washington, signaling intent to align both countries’ approaches to crypto governance.
One proposal under review is a “transatlantic sandbox,” a collaborative regulatory environment for testing digital securities. This concept, previously suggested by SEC Commissioner Hester Peirce, is gaining traction as both nations move to modernize their crypto laws.
Reeves stressed that the UK will continue to support innovation, but only within a system that penalizes fraud and promotes responsible behavior. She also revealed that the UK’s broader Financial Services Growth and Competitiveness Strategy, set to be unveiled on July 15, will further detail how blockchain and fintech fit into national economic planning.
FCA Framework Lays the Groundwork
The draft law is the latest development in a broader regulatory trajectory led by the Financial Conduct Authority (FCA), which has been gradually rolling out a roadmap for crypto supervision. Full integration is expected by 2026.
This builds on earlier government actions, including a 2024 initiative to formally recognize digital assets and NFTs as property under UK law — a move intended to enable legal recourse in crypto-related theft and fraud cases.
As the United States presses forward with its own legislation on stablecoins and crypto banking, the UK’s new draft marks a decisive step toward synchronized global standards and a clearer legal environment for digital finance.