The United Kingdom has announced a sweeping overhaul of its cryptocurrency regulations, signaling a decisive shift toward the U.S. model of oversight while distancing itself from the European Union’s stricter regime. The new rules aim to strengthen consumer protections, bring digital assets under existing financial laws, and foster innovation in the fintech sector.
Under the proposed legislation, crypto exchanges and service providers operating in the UK will be brought within the scope of the Financial Services and Markets Act. This means crypto firms must adhere to the same standards as traditional financial institutions, including anti-money laundering rules and operational resilience requirements.
One of the most notable proposals is a ban on retail investors purchasing cryptocurrencies using borrowed funds, including credit cards. The Financial Conduct Authority (FCA) raised concerns after the number of consumers using debt to invest in crypto rose from 6% in 2022 to 14% in 2023. The FCA argues this trend heightens financial vulnerability due to the volatile nature of digital assets.
The UK will also regulate stablecoins—cryptocurrencies pegged to traditional currencies—but only those issued by UK-based entities. Foreign-issued stablecoins will remain outside the scope of UK oversight, contrasting with the EU’s more encompassing Markets in Crypto-Assets Regulation (MiCAR).
Additionally, crypto lending and staking activities are under increased scrutiny. The FCA is evaluating requirements such as credit checks and assessments of investment experience for users engaging in these high-risk activities. The move reflects concern over limited transparency in staking, which is currently used by 27% of UK crypto holders.
This regulatory shift follows high-level discussions between UK Chancellor Rachel Reeves and U.S. Treasury Secretary Scott Bessent, reinforcing a shared approach to digital asset regulation. The government hopes the new framework will attract global fintech investment while protecting retail consumers.
The consultation period remains open until June 13, 2025, with final regulations expected to be enacted by the end of the year.
