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The UK Government has set out its preferred approach to governing crypto-based assets in a move that also hints at an attempt to align the countries technology industry more closely with the US going forward. Chancellor of the Exchequer, Rachel Reeves, announced the changes during UK Fintech Week in London on Tuesday.
The UK’s proposed rules, outlined by the Treasury in a new policy paper, will cover crypto exchanges and brokers and provide financial services regulator the FCA with more powers to oversee digital assets. Meanwhile, Reeves has indicated that the UK will exempt overseas stablecoin issuers from any new rules, committing to closer co-operation with the US in regulating the emerging global market for digital assets.
In the US, President Donald Trump has indicated that he plans to create a more liberal regulatory environment within which digital assets can thrive with the goal of making the country “the crypto capital of the world”.
The latest draft rule changes are an amendment to the Financial Services and Markets Act of 2000 and are designed to implement regulatory boundaries that promote safe and responsible technological advancement. The proposals are in response to the burgeoning interest in crypto assets in the UK and globally. According to the FCA, UK crypto ownership rose to 12% in 2024 from just 4% in 2021.
Reeves has also revealed ongoing discussions with the US to coordinate on digital asset policy. Talks with her US counterpart, Scott Bessent during her recent visit to America apparently included proposals for a “transatlantic sandbox” for digital securities. The UK and the US plan to continue this dialogue.
The UK’s planned stablecoin regulation contrasts with the far stricter approach of the EU, which came into force in December 2024. Any company selling a stablecoin to EU investors must secure authorisation from European regulators. The US also requires “significant” stablecoins to meet tough rules on liquidity and reserves.
The latest news marks a potentially major step forward for crypto assets in the UK. The approach outlined by the UK Government appears to be in sync with the US, bringing crypto assets into the orbit of existing regulatory frameworks rather than developing specific legislation. The UK crypto sector, which has seen the majority of recent applications rejected by the FCA on AML grounds, is likely to welcome the government’s proposals and the prospect of a more liberal approach to governance.
Posted by: Jon C Davies at 09:17