The UK government has accelerated its efforts to create a specific regulatory framework for crypto, underscoring the growing importance of the asset class.
UK government accelerates crypto regulation
Draft legislation released at the end of April by the Treasury—the UK government’s finance department—would bring crypto trading within the regulatory remit of the Financial Conduct Authority (FCA).
This is part of a wider trend of regulators around the world catching up market developments. And it looks like the UK’s ambitions are somewhere between the more innovation-focused US and the EU’s consumer protection emphasis.
“Crypto is an area of potential growth for the UK but it has to be done right,” David Geale, FCA executive director of payments and digital finance, told the London-based Financial Times. “To do that we have to provide an appropriate level of protection.”
And although this a baby step, it could create momentum for cryptocurrencies to become a more mainstream investment class.
Following the Treasury’s announcement, the FCA has started to outline its intentions to add new rules beyond the existing national anti-money laundering and consumer-protection legislation regime.
Regulatory objectives
The FCA has highlighted six key objectives:
- Consumer protection
- Market integrity
- Effective competition
- International competitiveness and growth
- Sustainable economic and financial systems
- Accessibility
One specific measure being discussed is preventing consumers from borrowing money to buy crypto assets. But will it put a limit on people’s ability to trade? The FCA’s research shows UK crypto ownership is highest among young men, precisely the people who might not have a lot of cash to invest. Which leads to the second question: how quickly will they find loopholes?
Companies and investors can respond to the FCA’s Discussion Paper until 13 June 2025.
