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UK Unveils Draft Crypto Rules to Regulate Exchanges and Protect Investors

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  • UK draft law brings crypto exchanges and dealers under financial services regulation.
  • According to FCA research, UK crypto ownership rose from 4% in 2021 to 12% in 2024.
  • UK and US plan transatlantic collaboration on digital asset regulation and innovation.

The UK government has released draft legislation to regulate cryptoassets. The proposal intends to bring digital asset exchanges, dealers and agents within existing financial services law to improve investor confidence and consumer protection. Chancellor of the Exchequer Rachel Reeves announced the changes during UK Fintech Week in London.

According to the government, the draft amends the Financial Services and Markets Act 2000 to include crypto-related activities such as operating exchanges and offering custody services. The proposed framework establishes new transparency, operational resilience, and consumer protection standards that companies serving UK customers must implement.

These draft rules follow a notable rise in crypto adoption in the UK. According to data from the Financial Conduct Authority, 12% of UK adults owned or had owned crypto assets in 2024, compared to 4% in 2021. The initiative has been implemented to define safe regulatory boundaries for promoting responsible technological advancement.

International Cooperation and Transatlantic Alignment

In addition, Chancellor Reeves also revealed ongoing discussions with the United States to coordinate digital asset policy. These talks with U.S. Treasury Secretary Scott Bessent included proposals for a potential “transatlantic sandbox” for digital securities. The UK and US will continue this dialogue during the next June Financial Regulatory Working Group meeting.

The UK’s approach aligns more closely with the United States’ regulatory path, which treats crypto assets as securities, rather than the European Union’s specialized crypto framework under the Markets in Crypto Assets Regulation (MiCA). Experts suggest this alignment may offer greater clarity to firms operating across the Atlantic.

Nick Price, a financial services lawyer at Osborne Clarke, described the legislation as “a simple and straightforward piece” that introduces regulatory certainty. Simon Treacy from Linklaters noted that while the draft defines which assets and activities are in scope, more detailed implementation rules will follow.

Stablecoins and Crime Enforcement Measures

The legislative framework also contains provisions that intend to regulate stablecoin operations. The proposed framework specifies UK-based stablecoin issuers as the exclusive subjects for regulatory oversight. The inclusion reflects the growing recognition of stablecoins as digital payment instruments, potentially affecting monetary policy and consumer safety.

In addition, the UK government passed new legislation strengthening crypto-related enforcement efforts as part of its regulatory expansion. The crime bill passed earlier this year increases police authority to confiscate digital assets related to illegal activities.

These developments form part of the government’s broader Plan for Change which includes measures to grow the financial services industry. Reeves stated that the new rules “make Britain the best place to innovate and the safest place for consumers.” She emphasized that the UK remains open to responsible innovation but will act decisively against fraud and instability.

Notably, the Treasury is accepting feedback from stakeholders on the draft until May 25. After collecting industry feedback the final legislation will be introduced later in 2025.

Additionally, the Chancellor plans to launch the UK’s first Financial Services Growth and Competitiveness Strategy on July 15 at the annual Mansion House speech. The strategy prioritizes fintech development and targets UK leadership in digital finance.

UK Crypto Leaders Urge Starmer for Blockchain Strategy Amid Global Competition

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  • UK crypto leaders urge Prime Minister Keir Starmer’s government to appoint a dedicated crypto envoy and develop a national blockchain strategy.
  • Industry groups warn that the UK risks falling behind the U.S., Dubai, and Singapore without a clear, unified government approach.
  • Despite tighter FCA regulations, industry leaders argue for more proactive engagement to unlock the sector’s £57 billion potential.

A coalition of top UK trade associations has urged Prime Minister Keir Starmer’s administration to take decisive action in fostering the nation’s crypto and blockchain ecosystem. In a recent letter to Varun Chandra, Starmer’s special adviser on business and investment, six prominent digital economy groups called for the appointment of a dedicated crypto envoy and the development of a national strategy to enhance investment and innovation in the sector.

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The letter was signed by key industry organizations, including the UK Cryptoasset Business Council, Global Digital Finance, The Payments Association, the Digital Currencies Governance Group, the Crypto Council for Innovation, and techUK. These groups emphasized that a more coordinated approach could unlock billions in economic growth, create jobs, and cement the UK’s position as a global fintech leader.  

With the U.S. making bold moves such as former President Donald Trump’s crypto-friendly stance and the appointment of a dedicated “crypto czar” industry leaders warned that the UK risks lagging behind unless swift action is taken. 

“The UK has all the ingredients to lead in blockchain and digital assets strong talent, capital access, world-class universities, and a respected regulatory framework,” the letter stated. “What’s missing is a clear, unified government approach.” 

UK Crypto Future at Risk Without Action

To compete on the global stage, the coalition is pushing for a government-backed envoy to spearhead digital currency and blockchain policy. This role would act as a bridge between industry leaders, regulators, and policymakers ensuring that the UK remains attractive for digital asset firms and investors. 

The coalition advocates for a national action plan that includes a government-backed concierge service to attract high-potential startups, recognition of blockchain’s role in advancing AI and quantum computing for public services, and an industry-government-regulator forum to enhance transparency and collaboration.

Digital currency industry figures, such as Tom Griffiths, co-founder of BitCompli, echoed these concerns. In a LinkedIn post, Griffiths warned that while the Financial Conduct Authority (FCA) has expertise, the UK is losing ground to crypto-friendly jurisdictions like Dubai, Singapore, and parts of the EU. 

“If the FCA doesn’t act now, the UK risks missing out on the long-term economic benefits this sector offers,” Griffiths cautioned. 

UK Tightens Crypto Rules as FCA Increases Oversight

The UK government has ramped up digital currency regulation, particularly after last year’s high-profile bankruptcies. In September, a new bill clarified digital assets’ legal standing under UK property laws, classifying digital currency, NFTs, and carbon credits as “things” and “personal property.”

Meanwhile, the FCA has tightened rules, requiring crypto firms to register with the regulator and obtain approval for marketing materials. Exchanges must now provide clear risk warnings to customers. 

Despite these steps, industry leaders argue that more proactive government engagement is needed to drive growth and prevent the UK from falling behind in the blockchain revolution. 

With estimates suggesting that the digital currency sector could contribute up to £57 billion ($73.6 billion) to the UK economy over the next decade, the question remains: Will Starmer’s government step up to the challenge?

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Kraken Gains EMI License: What It Means for UK Crypto Traders, Report

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  • Kraken has secured FCA approval to operate as an Electronic Money Institution, enabling faster deposits and withdrawals for UK users.
  • With the new license, exchange aims to form partnerships with traditional financial institutions and expand its crypto offerings in the UK.
  • Kraken’s increased presence in the UK is bolstered by partnerships with major sports brands like Williams Racing F1 and Tottenham Hotspur FC.

Kraken has recently been granted an authorization from the FCA to operate as an Electronic Money Institution (EMI). This license enables Kraken to issue the electronic money which would enable the faster and convenient deposits and withdrawal of funds from the platform to the users in United Kingdom.

Kraken’s UK Expansion Plans

The new authorization will help company in developing the sort of relationships that it has intended to establish with conventional financial institutions. It also aims to launch new services in relation to the new market in the United Kingdom. Bivu Das, the General Manager Kraken UK, noted that the demand for cryptocurrencies in the UK has been on the rise as consumers seek financial services in the emerging market. 

Cryptocurrency adoption by the public has gradually increased in the United Kingdom in the recent past. The FCA’s research revealed that there are 7.3 million adults in the country are already investing in crypto or 12% of the total population. The transformation has also extended to increased GBP trading volumes for the platform, thus providing the UK more prominence as the global market.

This comes close on the heels of Kraken ‘s approval under the EU’s Markets in Financial Instruments Directive. This permits platform to provide regulated derivatives to the European trader. With approvals from the United Kingdom and the European Union, Kraken is setting itself up to be one of the dominant cryptocurrencies that connect with classical tools for global finance.

Strategic Sports Partnerships Boost Kraken

It has also increased its coverage in the UK through strategic branding affiliations with sport clue brands. Recently, platform has entered into partnership agreements with Williams Racing F1 as well as Tottenham Hotspur FC. These affiliations also prove useful to expand company’s outreach and strengthen its brand in the UK more.

https://twitter.com/krakenfx/status/1899090339459182686

Kraken has had its operations in the United Kingdom since 2014. It was also the first exchange to list a BTC/GBP trading pair that enhance its presence in the market. Currently, this exchange offers access to more than 300 cryptocurrencies, and there are many fiat gateways available for UK customers.

As for the future development, platform is going to expand its range of both crypto and fiat offerings in the near future. These new offerings will increase the number of tools available for users in the UK to protect their digital assets. With such expansion plans, compnay is poised to increase its incorporation into the development of the country’s crypto marketplace.

UK Fortifies Crypto Framework To Ensure Market Integrity

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In a landmark move, the United Kingdom has strengthened its legal framework to fight financial crimes in the cryptocurrency industry. The Financial Conduct Authority (FCA) which supervises the growing crypto market of the UK will soon be endowed with more authority to tackle illegal activities surrounding digital assets.

The Economic Crime and Corporate Transparency Bill, launched last year, represents the turning point of this regulatory development. It is designed to grant UK authorities power to seize Bitcoin or other crypto funds should they be suspected of being involved in criminal activities. This crucial step also fits into the general plan to preserve safety within the banking system in Britain and stop hackers from engaging in the illegal use of virtual assets.

An item of property that is, or that contains or gives access to information that is likely to assist in the seizure […] of any crypto asset, the legislation said.

UK Legislation: Balancing Crypto Innovation And Security

The latest bill is not just a law enforcement instrument; it is a guiding star for investors and participants in the crypto-economy. The legislation provides a 90-day seizure period of digital assets during criminal investigations that allows it to act as a buffer against swift movements of illegal money often associated with digital assets related crimes.

The rule will come into effect on April 26, 2024. It is also intended to discourage people from using the technology for illegal activities, as it can lead to anonymous transactions. This message is clear; United Kingdom will not accommodate crypto crimes.

These moves are not meant to kill innovation or investment but rather to keep them safe. United Kingdom is giving a head start on how to have a safe cryptoworld for real growth but it also sets a stage for stable crypto environment that can facilitate true growth and build investor’s trust again.

The UK’s proactive approach is a significant milestone in synchronizing vitality of the virtual assets market with the solidity of the traditional financial controls. It is expected to become a model for other countries as they try to strike a balance between digital currencies’ potential and security needs.

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Crypto Could Become Property Under Proposed UK Law Reform

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England’s Law Commission, an independent body that gives advice to the government on legal reforms in England and Wales, has published a draft bill that would recognize crypto assets as property. It intends to bring more certainty and clarity to the growing digital currencies market and its users.

According to the Law Commission, crypto assets like tokens and non-fungible tokens (NFTs) are not classified as personal property, which is either physical or rights-based. This poses legal problems and dangers to people who own crypto in instances of insolvency, theft, or fraud.

“Personal property rights are important for many reasons, including in the event of insolvency or where assets are interfered with or unlawfully taken, […] However, because digital assets differ significantly from physical assets, and from rights-based assets like debts and financial securities, they do not fit within traditional categories of personal property, the commission said on Thursday.

The draft bill suggests a new kind of property known as “digital assets,” which will encompass crypto assets among other non-physical assets that are registered, traded, or kept on electronic devices. The bill would also define the key features, legal effects, and rights over digital assets, including ownership and transferability, security, and enforcement.

The Law Commission hopes that a clear and consistent legal framework will be provided by the draft bill for crypto assets which would be beneficial for both the industry and consumers. The commission also believes that this proposal would improve the UK’s reputation as a leading jurisdiction for crypto innovation and adoption.

Law Commission Seeks Feedback On Crypto Legislation

The Law Commission has invited the public and stakeholders to share their views and feedback on the draft bill by March 22, 2024. According to the commission, it invites comments from everyone with any interest or expertise in crypto assets, such as lawyers, scholars, supervisors, programmers, shareholders, customers, and service providers.

The draft bill is among several initiatives within the broader digital assets project of the Law Commission that encompasses electronic trade documents and private international law issues. The commission has also called for evidence to support this project before May 16, 2024.

The Law Commission said it aims to publish a final report and a revised draft bill by December 2024 for submission to the government. The commission added that this draft bill was not a government policy or assurance of forthcoming legislation but an advice for change resulting from their research and analysis.

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Crypto Crackdown? UK Probes Banking Blockade

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The UK’s ambition to become a global crypto haven faces a roadblock – licensed crypto firms struggling to open basic business accounts. Finance Minister Jeremy Hunt, acknowledging these concerns, has promised an investigation with Economic Secretary Bim Afolami. This comes in response to Lisa Cameron, Chair of the Crypto and Digital Assets All-Party Parliamentary Group, highlighting the obstacles these firms face.

Despite Hunt’s confident claim of the UK being a “global crypto hub,” particularly London, the reality seems less rosy. Licensed firms, crucial for building a legitimate and regulated digital asset ecosystem, are hampered by a lack of banking access. This could stifle innovation and deter investment, contradicting the UK’s stated goals.

3 Steps to Unlock UK’s Crypto Boom

Hunt’s proposed investigation aims to understand the reasons behind these banking roadblocks. Is it due to concerns about money laundering or terrorism financing? Do banks lack the knowledge or infrastructure to handle digital asset-related accounts? Finding answers and proposing solutions are critical to keeping the UK’s digital asset ambitions on track.

However, Hunt’s commitment to fostering digital asset growth remains apparent. He emphasized the recent introduction of legislation for stablecoins and digital asset services promotion. Additionally, the new regulations for the Digital Securities Sandbox (DSS) starting January 8th, 2024, demonstrate the government’s efforts to create a controlled environment for testing and developing innovative digital asset-based solutions.

The DSS, allowing experimentation with tokenized securities and distributed ledger technology, signals a forward-looking approach. It provides a safe space for businesses to innovate while mitigating risks for consumers and the wider financial system.

But the banking access issue presents a significant hurdle. If licensed firms cannot operate like any other legitimate business, the very foundation of the UK’s digital asset aspirations falters. The promised investigation needs to be swift and thorough, followed by concrete measures to ensure inclusivity for crypto firms within the banking system.

Only by addressing these access issues and creating a welcoming and supportive environment for responsible crypto businesses can the UK truly claim its title as a global crypto hub. The path forward demands not just lofty ambitions but also practical solutions to the ground-level challenges hindering legitimate players in this burgeoning field.

PayPal UK Registers With FCA for Crypto Activities As It Rides High On Q3 Earning

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PayPal UK has taken a significant step in the world of cryptocurrency by registering with the UK’s Financial Conduct Authority (FCA). This move allows the company to engage in “certain cryptoasset activities” within the country. To operate in the UK’s crypto market, companies must gain registration approval and adhere to the FCA’s anti-money laundering regulations.

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In 2023, it became the fourth firm to secure FCA’s crypto registration, following Interactive Brokers, Bitstamp, and Komainu. This registration not only allows PayPal to operate within the UK crypto market but also permits the company to approve its own crypto-related communications in line with the recently imposed marketing regulations.

In August, the company had temporarily paused crypto purchases in the UK to comply with these new regulations. However, the registration on the UK crypto register does not impact this temporary pause, as clarified by a PayPal spokesperson.

The company spokesperson stated:

The Financial Conduct Authority has approved PayPal UK Ltd as an authorised electronic money institution and consumer credit firm, and registration as a crypto asset business, enabling the transfer of PayPal’s U.K. customer accounts to this new U.K. entity from PayPal Europe on 1 November 2023

Nevertheless, PayPal UK will have certain limitations. It won’t be able to expand its current crypto offerings into activities such as staking, exchanging crypto assets, participating in initial coin offerings, and engaging in decentralized finance activities like lending without obtaining permission from the FCA, as outlined on the regulator’s website.

Growth & Confidence at PayPal Holdings

Meanwhile, the company appears to be making strides in its turnaround efforts. Its third-quarter results surpassed analyst expectations, with adjusted earnings climbing 20% year-over-year to $1.30 per share and revenue reaching $7.4 billion, in line with projections. Total payment volume rose by 13% to $387.8 billion, though the total number of active accounts decreased by four million to 428 million.

Following these positive results, the company raised its full-year earnings forecast and announced Jamie Miller as its new chief financial officer, signaling its commitment to ongoing growth and development in the fintech sector. 

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