The United Kingdom is taking decisive steps toward becoming a world leader in digital asset regulation. On April 29, Chancellor of the Exchequer Rachel Reeves announced the government’s intention to implement a “comprehensive regulatory regime” for the crypto sector, aiming to attract innovation while securing the financial system.
The UK Treasury detailed the framework in a statement released after Reeves’ remarks, confirming that crypto exchanges, agents, and service providers will soon be regulated under standards similar to those applied to traditional financial institutions. The new approach is formalized under the Financial Services and Markets Act 2000 (Cryptoassets) Order 2025, which introduces six newly regulated activities, including crypto trading, custody, and staking.
Rather than adopting a lighter touch similar to the European Union’s Markets in Crypto-Assets Regulation (MiCA), the UK is instead applying the full weight of securities law. This includes requirements for capital reserves, operational resilience, governance frameworks, and market abuse protections.
Industry Reaction: A Welcome Shift Toward Clarity
The reaction from the digital asset industry has been largely positive. Dante Disparte, Chief Strategy Officer and Head of Global Policy at Circle, welcomed the initiative, saying, “The UK’s draft crypto regulations represent a meaningful step toward embracing a rules-based digital asset economy.”
Disparte emphasized the importance of transparency in fostering long-term growth: “By signaling a willingness to provide regulatory clarity, the UK is positioning itself as a safe harbor for responsible innovation.” He added that the framework could provide the predictability necessary to “scale responsible digital financial infrastructure in the UK.”
Bitget’s Chief Operating Officer, Vugar Usi Zade, also expressed confidence in the changes. “I think a lot of companies recently exited or hesitated to enter the UK because they were not clear about what activities, products, and operations need FCA authorization,” he said. According to Zade, the new framework finally offers clear definitions for “qualifying crypto assets,” along with specific guidance for which services—trading, custody, staking, or lending—require approval from the Financial Conduct Authority (FCA).
For crypto firms, the road ahead includes a two-year transition period to align systems with the new compliance perimeter, including capital and reporting requirements. “Mapping each service line to the new perimeter adds compliance overhead, but that clarity lets us plan product rollouts and invest in local infrastructure,” Zade noted.
Stablecoins Reclassified and Overseas Firms Targeted
One of the more striking changes in the draft legislation is the reclassification of stablecoins. Under the proposed rules, fiat-backed tokens issued in the UK will be treated as securities rather than electronic money. This means UK stablecoin issuers must meet the same rigorous disclosure and redemption protocols required of traditional securities.
Non-UK stablecoins will still be permitted, but only through FCA-approved platforms. While this adds oversight, it may limit stablecoin utility in payments. Zade warned that excluding stablecoins from the Electronic Money Regulations 2011 could “slow their use for payment.”
Nonetheless, Disparte—whose firm Circle issues USDC, the world’s second-largest stablecoin—reiterated that regulatory certainty matters more than classification. “What matters most is predictability: a framework that enables firms to build, test, and grow responsibly—without fear of arbitrary enforcement or shifting goalposts,” he said. “If realized, this could mark a pivotal moment in the UK’s digital asset journey.”
Expanding the FCA’s Reach and Crypto Staking Oversight
Perhaps the most consequential expansion of the draft regulations is the extension of FCA oversight to non-UK platforms that serve retail clients in the UK. Previously, many overseas firms operated under the “overseas persons” exemption, but this will now be restricted to certain business-to-business relationships—effectively ring-fencing the UK’s retail market.
Crypto staking is also brought within the regulatory perimeter. Liquid and delegated staking providers will need to register, although solo stakers and providers who merely offer interfaces without custodial control are exempt.
Zade cautioned that the broad language surrounding “staking” might unintentionally include non-custodial decentralized finance (DeFi) platforms. He also expressed concern over possible restrictions on credit card purchases, which he said could “dampen retail participation in token launches.” Further, bank-grade segregation requirements for client assets could place a heavy burden on lean DeFi startups, he said, adding, “Final rule tweaks will need to mitigate these side effects.”
What’s Next: A Regulatory Roadmap to 2026
The Financial Conduct Authority plans to finalize the rules by 2026, allowing time for stakeholders to adapt and provide feedback. This roadmap positions the UK to rival major jurisdictions like the EU, which began implementing MiCA in December.
For now, the UK’s signal to the crypto world is loud and clear: it is not shying away from regulation—it is embracing it to foster a more predictable, innovation-friendly environment. If implemented as proposed, the UK could very well become a “safe harbor for responsible innovation,” as Disparte described—a new regulatory model for the next era of digital finance.
