UK Finally Moves on Crypto Regulation, Plans to Align More Closely with US

The UK Treasury has outlined its plans for regulating the cryptocurrency industry and bringing the sector into the regulatory perimeter, including rules for stablecoin issuance and market abuse. At the same time, Chancellor Rachel Reeves said the UK would work closely with the US as a partner for “engagement” in the quest for growing digital assets responsibly.

The Treasury has published a consultation of its planned rules, allowing a short period for comments from the industry with a closing deadline of May 23. The planned rules are closely aligned with the current US regulatory agenda around stablecoins and they include an exemption for overseas issuers. The new rules will give the UK Financial Conduct Authority (FCA) the remit to regulate digital asset service providers and it outlines requirements for exchanges, brokers and good market practices.

In a speech at the UK Fintech Week, the Chancellor told delegates that she will use the upcoming UK – US Financial Regulatory Working Group to continue engagement around digital assets and rules around the space. The two countries already held meetings with the Chancellor and US Treasury Secretary, Scott Bessent, discussing opportunities to support innovation on both sides of the Atlantic. Ideas discussed include a proposal by SEC Commissioner Hester Peirce for a transatlantic sandbox for digital securities.

“Today’s announcement sends a clear signal: Britain is open for business — but closed to fraud, abuse, and instability,” the Chancellor said.

The government is using its Plan for Change initiative to drive its agenda around digital assets forward, including establishing clear new rules to give investors confidence and protect consumers. The plans come as the `Treasury estimates that 12% of UK adults own crypto assets, up from just 4% in 2021.

“Under the new rules, crypto exchanges, dealers and agents will be brought into the regulatory perimeter — cracking down on bad actors while supporting legitimate innovation.  Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection, and operational resilience — just like firms in traditional finance,” the Treasury says.

The Chancellor also told delegates that the government would publish the first-ever Financial Services Growth and Competitiveness Strategy on 15 July, alongside her Mansion House speech, which will outline plans for supporting the growth of financial services. Fintech has been identified as a priority sector.

The UK has been slow to create rules for digital assets, with the EU’s comprehensive rulebook, MiCA already live since last year. Regulatory momentum got going in October 2023, when HM Treasury published detailed proposals for creating a UK financial services regulatory regime for crypto assets, including stablecoins. A year later the government confirmed its intention to proceed with proposals.

“The government remains committed to making the UK a global hub for digital asset technologies, aligned with the Plan for Change to drive growth, innovation and security,” the Chancellor said.