On April 29, 2025, UK Finance Minister Rachel Reeves revealed proposals for a “thorough regulatory framework” intended to position the nation as a global frontrunner in digital assets.
Under the suggested regulations, cryptocurrency exchanges, sellers, and brokers will be governed similarly to conventional financial institutions, requiring transparency, consumer safeguards, and operational resilience, the UK Treasury stated in a release following Reeves’ comments.
According to the announcement, the Financial Services and Markets Act 2000 (Cryptoassets) Order 2025 establishes six new regulated activities, encompassing crypto trading, custody, and staking.
Instead of opting for a lenient framework akin to the EU’s Markets in Crypto-Assets (MiCA), the UK is imposing the full spectrum of securities regulation on crypto, according to the UK-based law firm Wiggin. This encompasses capital requirements, governance guidelines, market abuse regulations, and disclosure responsibilities.
“The UK’s draft crypto regulations signify a significant advancement toward adopting a rules-based digital asset economy,” Dante Disparte, chief strategy officer and head of global policy at Circle, informed Cointelegraph.
“By indicating a readiness to offer regulatory clarity, the UK positions itself as a safe haven for responsible innovation.”
Disparte further stated that the proposed framework can deliver the certainty required to “expand responsible digital financial infrastructure in the UK.”
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UK’s New Crypto Regulations Are “Net Positive”
Vugar Usi Zade, the chief operating officer (COO) at Bitget exchange, also conveyed hope regarding the new regulations, asserting that it “is a net positive” for the sector.
“I believe that many companies recently departed or were reluctant to enter the UK because they lacked clarity on what activities, products, and operations require FCA authorization. Firms are finally given precise definitions of “qualifying crypto assets” and understand exactly which activities—trading, custody, staking, or lending—demand FCA authorization.”
For exchanges, such as Bitget, the UK’s draft regulations signify that they must obtain full approval from the Financial Conduct Authority (FCA) to provide crypto trading, custody, staking, or lending services to UK clients.
The regulations also allow companies two years to modify their systems, such as capital and reporting requirements. “Mapping each service line to the new framework introduces compliance overhead, but that clarity enables us to plan product roll-outs and invest in local infrastructure,” Zade stated.
The new draft regulations classify stablecoins as securities instead of e-money. This means that UK-issued fiat-backed tokens must adhere to prospectus-like disclosures and redemption procedures. Non-UK stablecoins may still operate, but only through authorized venues.
Zade indicated that excluding stablecoins from the Electronic Money Regulations 2011 (EMRs), which prevents them from entering the e-money sandbox, could hinder their use for payments.
However, Disparte, whose firm issues USDC (USDC), the second-largest stablecoin globally by market capitalization, remarked that predictability is essential for fostering responsible development in the UK.
“What is most crucial is predictability: a structure that enables firms to build, test, and expand responsibly—without the fear of arbitrary enforcement or shifting criteria. If accomplished, this could signify a landmark moment in the UK’s digital asset evolution.”
Related: UK Regulator Moves to Limit Borrowing for Crypto Investments
UK to Mandate FCA Approval for Foreign Crypto Entities
One of the most significant modifications in the new draft regulations is the territorial scope. Non-UK platforms catering to UK retail clients will now require FCA authorization. The “overseas persons” exemption is confined to specific B2B relationships, effectively isolating the UK retail market.
Crypto staking comes under the regulatory framework as well. Liquid and delegated staking services must now register, while solo stakers and purely interface-based providers are exempt. New custody regulations extend to any arrangement that grants a party unilateral transfer rights, including certain lending and MPC (multiparty computation) setups.
“Some DeFi intricacies still require clarification, but the trend is toward efficient, tailored compliance rather than blanket prohibition,” Bitget’s Zade remarked.
He noted that the broad definition of “staking” might encompass non-custodial DeFi models without a central provider. “Proposed credit-card purchasing restrictions—though aimed at high-risk usage—could reduce retail participation in token launches,” he added.
Moreover, Zade mentioned that bank-grade segregation guidelines for client assets could impose burdens on lean DeFi initiatives. “Final adjustments to the regulations will need to alleviate these side effects.”
The FCA intends to release final regulations on crypto by 2026, laying the foundation for the UK regulatory regime to become operational. The pathway towards enhanced regulatory clarity in the UK may follow that of the European Union, which commenced the implementation of its MiCA framework in December.
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