UK unveils crypto crackdown as it follows US lead on regulation

The UK is preparing to bring the first-time fast-moving cryptocurrency world as Prime Minister Rachel Reeves announced this week a plan to round out the dangerous players while supporting sector innovation.

The move shows a clear pivot towards the US model of crypto surveillance, distancing the UK from the more crypto-specific approach the EU took.

Under the new bill, crypto exchanges, trading platforms and affiliates operating in the UK will be subject to stricter rules on transparency, consumer protection and operational resilience, just like traditional financial institutions.

The UK is consistent with us in crypto rules and is different from the EU approach

After a visit to Washington, Reeves confirmed that the UK will coordinate closely with the US on crypto regulations and has already discussed the issue with US Treasury Secretary Scott Bescent. More talks are expected in June.

“We are making clear that the UK will not be a safe haven for actors in the crypto field,” Reeves said.

The rules also make it clear that UK customers and crypto companies they treat must meet defined criteria, regardless of where they are based. This includes being able to withstand shocks, protect user data and protect client funds.

In contrast, the EU MICAR framework has been regulated to suit different types of tokens and service providers, taking a larger approach to the sector. Experts say the UK’s decision to reflect the US stance – treating crypto like mainstream securities – creates a more predictable legal environment for businesses, but could also increase barriers for newcomers.

UK Regulating Stablecoins – But only domestic publishers

The new rules also outline plans to regulate a type of cryptocurrency (usually fixed to currencies like the US dollar) that aim to maintain a fixed value. However, only those issued by UK-based companies will be subject to future laws.

That may leave room for international Stablecoin providers to continue operating with less surveillance, at least in the short term.

Bank of England Governor Andrew Bailey has long been a crypto critic, warning that assets like Bitcoin are dangerous, unstable and should not be seen as reliable and valuable reservoirs. However, he shows more willingness to engage in Stablecoins, which he sees as potentially useful if they are properly regulated.

Crypto adoption is rising in the UK amid concerns about investor protection

UK crypto ownership jumps significantly, with 12% of adults holding or holding cryptocurrency, starting from just 4% in 2021. That growth has sparked concerns about consumer protection.

Some critics warn that bringing crypto under the umbrella of regulations could justify an inherently dangerous space and provide false sense of security for investors.

Still, many in the financial sector welcome clarity. Osborne Clark’s cryptography expert Nick Price called the law “easy” and said it would bring “much-needed certainty and protection” to the market.

Simon Treacy, a financial services lawyer for Linklaters, noted that the new law defines which assets and activities are regulated, but emphasized that details will be resolved later by UK regulators as the framework is built.

Reform of the UK’s financial sector: What’s coming next?

Prime Minister Reeves also made it clear in his upcoming Mansion House speech on July 15 that he will outline his long-term vision for the financial services industry.

The speech is expected to build on months of consultation and address the balance between innovation and risk in post-Brexit financial markets. Last year, Reeves suggested that regulators may have been limiting risks too much since the 2008 financial crisis.

Conclusion? The UK is no longer sitting on the fence. By stepping into the US with Crypto, the government wants to support innovation while preventing it from cracking down on the worst West actions, without going down the EU’s more complicated regulatory path.

For more UK news, stay tuned for globalnewsphere