Prime Highlights:
- The UK Treasury will bring crypto and digital asset companies under full regulation from 2027, with oversight by the FCA, aligning them with traditional financial products.
- The new rules aim to protect consumers, support responsible innovation, and provide companies with clear guidance to grow safely in the UK.
Key Facts:
- Crypto exchanges, digital wallets, and other platforms will be required to meet standards for transparency, compliance, and governance similar to other financial services.
- Current limited oversight means many crypto businesses operate without the protections available in regulated financial products, a gap the new framework seeks to close.
Background:
The UK Treasury will regulate crypto and digital asset companies from 2027, with oversight by the FCA, like other financial products.
Chancellor Rachel Reeves said the rules will help protect consumers and support safe innovation. Under the proposed rules, crypto exchanges, digital wallet providers and other service platforms will be required to meet transparency, compliance and governance standards similar to those applied across the wider financial services industry.
Chancellor Rachel Reeves said the rules aim to keep consumers safe and encourage responsible innovation. She added that clear rules will help companies invest and expand safely while protecting consumers and keeping fraudsters away.
At present, many cryptocurrency businesses operate with limited oversight, meaning customers often lack the protections available when investing in regulated financial products. Treasury officials believe the new framework will increase transparency, improve detection of suspicious transactions, and make it easier to enforce sanctions and hold firms accountable.
Lucy Rigby, Minister for the City of London, said the reforms are intended to make the UK a more attractive destination for legitimate crypto firms. She said the new rules will give companies clear guidance and stability, helping them plan and expand confidently in the UK.
The announcement follows closer scrutiny of the crypto sector after recent market swings and a rise in fraud. Banking data shows that losses from investment scams among UK consumers jumped by 55% in a year, with fake cryptocurrency schemes thought to be the most common.
Authorities seized 61,000 bitcoins, now valued at more than £5 billion, during a 2018 raid on a Hampstead property. The case is believed to be the largest single cryptocurrency seizure in the world.
Alongside new financial rules, ministers are also looking at banning political donations made using cryptocurrency, as it can be hard to trace where the money comes from. The move follows attention on parties that have accepted crypto donations, including Reform UK, which began doing so earlier this year.
The Treasury’s plans aim to strengthen oversight of digital assets while protecting consumers and supporting innovation.