Summary: Key Points at a Glance
- UK Treasury publishes draft legislation for regulating crypto services.
- New rules cover stablecoins, staking, custody, and crypto promotions.
- FCA to oversee crypto firms under the same standards as traditional finance.
- Crypto firms must be authorized to operate in or serve UK clients.
- Final legislation expected by July 15.
- Rachel Reeves: “Britain [aims to be] the best place in the world to innovate.”
A New Regulatory Era for Crypto in the UK
On April 29, the UK Treasury unveiled a draft legislation aiming to regulate crypto services such as stablecoins, staking, and custody. This is part of the broader “Plan for Change”—a national initiative to align crypto oversight with traditional financial regulation under the supervision of the Financial Conduct Authority (FCA).
Chancellor Rachel Reeves expressed strong support for this move, stating that the changes aim to make:
“Britain the best place in the world to innovate,”
adding that robust rules around crypto will “boost investor confidence, support growth, and protect UK investors.”
What the New Law Covers
The draft Financial Services and Markets Act 2000 (Amendment) Order 2025 outlines that crypto firms will need official authorization to operate in the UK or interact with UK clients. This applies regardless of whether the firm is based in the UK or abroad.
Key changes include:
- Defining “qualifying cryptoassets” and “qualifying stablecoins” under law.
- Bringing crypto activities under the same legal standards as other financial instruments.
- Requiring authorization for issuing stablecoins, operating platforms, providing custody, dealing in crypto, arranging transactions, and offering staking services.
Interestingly, stablecoins used for payments will not yet fall under the Payment Services Regulations, signaling that further rules may follow as adoption grows.
Who Will Be Affected
Any firm—domestic or international—that serves UK consumers or operates within the country must secure authorization.
Specifics include:
- Custody and staking services need approval if serving UK clients.
- Stablecoin issuers only require authorization if their business is physically established in the UK.
- True decentralized (DeFi) services with no identifiable control party remain outside the scope—for now.
Changes to Advertising and AML Requirements
The legislation also updates the Financial Promotion Order 2005. Under the new rules, authorized crypto firms can self-approve financial promotions, ending the current temporary workaround for registered but unauthorized firms.
Additionally, amendments to AML (Anti-Money Laundering) laws mean that once a crypto firm is authorized under the new system, it won’t need separate AML registration—but it must still comply with all existing AML regulations.
Firms must notify the FCA when they start or stop crypto-related services.
What’s Next: Timeline and Implementation
To ease the transition, the FCA will open an application window before the rules are fully implemented. Firms already operating in the UK will have time to apply for authorization.
If a firm fails to obtain approval, it must enter a two-year wind-down period, during which only pre-existing contracts may be fulfilled—no new business with UK consumers will be allowed.
The final version of the legislation and the Financial Services Growth and Competitiveness Strategy will be released by July 15.
Meanwhile, the UK continues discussions with US counterparts to build cross-border cooperation in digital finance and tokenized securities.