The UK government announced plans to bring cryptocurrencies under formal financial regulation, aligning more closely with the United States rather than the European Union. Finance Minister
Rachel Reeves confirmed the move on Tuesday, emphasizing that it would strengthen cooperation with U.S. authorities on the future oversight of digital assets.
Under new draft legislation, crypto exchanges, brokers, and service providers will fall within the UK's regulatory scope. These companies will be required to meet standards for transparency, consumer protection, and operational resilience. The aim is to crack down on illicit activity while fostering legitimate innovation, according to the finance ministry.
The proposal reflects a shift in global regulatory alignment, as the UK echoes the U.S. model of treating crypto as financial securities. This contrasts with the EU’s Markets in Crypto-Assets Regulation (MiCAR), which takes a more bespoke approach to the sector.
Reeves discussed the regulatory strategy with U.S. Treasury Secretary Scott Bessent during a visit to Washington and said further talks are planned for June.
The proposed legislation comes amid growing political support for digital assets in the U.S., particularly from former President Donald Trump, who has pledged to loosen crypto regulations. This trend has raised concerns among eurozone officials about potential risks to financial stability and monetary autonomy.
According to government data, about 12% of UK adults have owned cryptocurrencies like bitcoin or ethereum, up from just 4% in 2021. Despite this growth, Bank of England Governor Andrew Bailey continues to caution against bitcoin as a secure store of value but sees a stronger case for regulating stablecoins—digital currencies pegged to fiat currencies or other assets.
The draft law stipulates that stablecoin issuers will be regulated only if they are based in the UK. The finance ministry aims to finalize the legislation by the end of 2025, building on initial proposals released in 2023.
While some critics argue that regulation could create a false sense of safety for investors, others welcome the clarity. Nick Price, a financial services lawyer at Osborne Clarke, described the bill as “simple and straightforward,” bringing much-needed stability and consumer protection.
Simon Treacy, a financial services lawyer at Linklaters, noted that although the legislation outlines which crypto assets and activities will be regulated, more detailed rules will follow from financial regulators.
Reeves also announced plans to unveil a broader strategy to boost the competitiveness of the UK financial sector during her Mansion House speech on July 15. This follows a consultation launched in November 2024. In her 2024 speech, Reeves criticized regulators for overcorrecting in the wake of the global financial crisis by excessively minimizing risk. Photo by Jorge Franganillo, Wikimedia commons.