The UK government has published draft legislation that will bring cryptoassets under the remit of existing financial regulations, aligning with the US. This deviates from the EU approach of creating a standalone framework for the industry, which crypto businesses may find more restrictive.
New law would classify cryptoassets as financial instruments
UK Chancellor Rachel Reeves announced on Tuesday the compulsory regulation for crypto exchanges, dealers, and agents will be finalised by the end of the year.
“Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK,” she said in a statement.
The draft statutory instrument will bring crypto companies operating in the UK under the remit of the Financial Services and Markets Act 2000, following a 2023 Treasury consultation that proposed the amendment. To ensure crypto activities can continue in the UK while protecting consumers, some cryptocurrencies and entities are exempt from regulation; this includes stablecoin, a cryptocurrency whose value is pegged to stable assets.
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Crypto is becoming more popular in the UK, warranting clearer rules. According to the Financial Conduct Authority, around 12% of UK adults owned crypto in 2024, up from 4% in 2021. Crypto bosses have been critical of the UK’s handling of the digital asset sector so far, arguing that the registration process for new firms is too strict and slow.
The Treasury has invited stakeholders to provide technical comments on the draft legislation until May 23.
UK aligns its regulatory approach with Trump’s
The legislation mirrors the US’s approach to cryptoassets, which primarily treats them as financial securities subject to existing regulatory frameworks. Three days into his second term, President Donald Trump signed the “Strengthening American Leadership in Digital Financial Technology” executive order, which directed federal agencies to develop a unified regulatory framework for digital assets.
SEE: Trump Vows to Make America the ‘Crypto Capital of the World’ With US Crypto Reserve
In her speech announcing the UK’s approach to crypto regulation, Reeves said she had discussed with US Treasury Secretary Scott Bessent how to “allow for greater collaboration on digital securities between the UK and US.” One point discussed was the proposed cross-border digital securities sandbox between the two countries, making it easier for crypto firms to test new financial products and services in both jurisdictions.
Reeves added that discussions will continue at the June UK-US Financial Regulatory Working Group meeting.
“For the UK to be a world-leader in digital assets, international cooperation is vital,” she declared. “Regulation must support business, not hold it back.”
This is not the first time the UK has appeared to cosy up to the current US administration. In March, concerns were raised that Trump’s criticism of AI regulation led officials to delay the launch of the AI Safety Bill.
Europe prefers bespoke crypto regulations
Europe has taken a different approach to overseeing cryptocurrency than the UK and the US.
In December 2024, the Markets in Crypto-Assets framework came into effect, establishing a new regulatory regime specifically for crypto assets and helping to ensure market stability across the Member States.
The bloc often has a more risk-averse approach to regulation, drawing criticism from the current US administration, which takes a more pro-innovation, pro-growth position. Trump recently referred to the EU as “one of the most hostile and abusive taxing and tariffing authorities in the World.”
In March, Eurozone finance ministers expressed concern about the potential global effects of the US’s deregulatory stance on crypto.
We know this is a global market and policy developments in other jurisdictions can have important consequences for us here in Europe,” Eurogroup president Paschal Donohoe stated. “So these discussions are fundamentally linked to our own autonomy and to the resilience of our currency.”
