UK crypto markets will be regulated like mainstream financial products

Starting in 2027, UK crypto markets will be subject to rules similar to those governing mainstream financial products and under the supervision of the Financial Conduct Authority (FCA).

This shift aims to bring digital assets, including Bitcoin, Ethereum, and stablecoins, within the same regulatory perimeter as traditional financial instruments such as stocks and bonds.

Moreover, officials stated that the change will enhance transparency in cryptocurrency markets, safeguard consumers, and equip regulators with more effective tools to address wrongdoing. They said the rules also strengthen consumer confidence while enhancing the UK’s ability to enforce sanctions.

Lucy Rigby, the minister for the City of London, even commented: “We want the UK to be at the top of the list for crypto assets firms looking to grow and these new rules will give firms the clarity and consistency they need to plan for the long term.”

Chancellor Reeves says new rules will foster growth and innovation

According to the UK Treasury, fresh legislation extending existing financial services regulations to crypto firms will be tabled in Parliament in the coming months. The reforms are designed to provide greater legal clarity and investor protection, while also strengthening the UK’s position as a competitive global financial centre.

Speaking on the new regulations, Chancellor Rachel Reeves, remarked: “Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world-leading financial centre in the digital age.”

She claimed the government is giving firms the certainty they need to grow and innovate, protect consumers, and shut dishonest operators out of the UK market.

Under the new rules, firms offering crypto services, from trading platforms to digital wallets, will be required to register with the FCA under UK AML regulations.

Lately, the crypto market has been shaken by concerns about overheated AI investments, and UK consumers have particularly suffered a sharp rise in scam-related losses, most often linked to bogus cryptocurrencies. In September, a UK court convicted a Chinese woman, Zhimin Qian, over a huge bitcoin scam that affected more than 100,000 victims. Prosecutors said she masterminded a fraud between 2014 and 2017 that cost around 128,000 people their savings.

Nevertheless, Qian pleaded guilty at Southwark Crown Court to acquiring and possessing cryptocurrency linked to crime.

UK officials are working to ban crypto donations

UK ministers plan to outlaw cryptocurrency political donations. They are concerned that crypto donations pose a risk to election integrity, especially because it’s hard to trace their source. However, the intricacies of cryptocurrency mean they don’t expect a ban to be included in the elections bill, which will also lower the voting age and address financial gaps.

Reform UK, led by Nigel Farage, could see its crypto fundraising plans disrupted by the government’s proposed ban. The party received its first registerable crypto contributions this autumn and operates its own portal with “enhanced” verification measures.

In July, Pat McFadden, a minister at the Cabinet Office at the time, stated that the Electoral Commission should investigate donations, noting the importance of knowing who the donors were, whether they were registered, and the legitimacy of the contributions.

A ban on cryptocurrency donations needs to be passed through legislation, even though the Electoral Commission provides guidance. Earlier in the year, the Commission suggested that cryptocurrency donations could be treated similarly to other assets or in-kind donations.

In August, Vijay Rangarajan, Chief Executive of the Electoral Commission, stated that he did not believe a ban was necessary, noting that parties already have a strong responsibility to verify the source of their donations. He noted that political parties are often given gifts that are much stranger than crypto, including artworks, overseas trips, or yacht usage, which can be challenging to assess.

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