UK crypto firms to face stricter rules under proposed regulatory framework

Lawmakers in the United Kingdom have issued draft rules that would bring crypto exchanges, dealers, and agents into the regulatory perimeter. On April 29, the UK Treasury and Chancellor of the Exchequer, Rachel Reeves, unveiled the proposals during a major summit in London as part of UK Fintech Week. The move forms a key pillar of the government’s broader Plan for Change initiative, which aims to drive innovation while keeping a check on fraudulent activities. “Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers,” Reeves said, adding that the upcoming framework is expected to “boost investor confidence, support the growth of Fintech and protect people across the UK.” What are the proposed crypto regulations? Under the proposed legislation, crypto firms offering services to UK customers will be required to meet clear standards on transparency, consumer protection, and operational resilience, similar to how traditional finance is regulated in the nation. The new framework would cover not just exchanges and brokers, but also custody providers and other service providers operating in the crypto space. The draft rules outline a range of activities that will now require formal authorization. This includes operating a cryptocurrency trading platform, dealing in cryptocurrency assets either as a principal or an agent, arranging cryptocurrency asset deals for others, and safeguarding customers’ cryptocurrency assets. Issuers of stablecoins will also be subject to regulation for the first time. Firms offering stablecoins pegged to fiat currencies will need to meet strict requirements around how they hold and manage backing assets to maintain value stability. Custody providers will be required to ensure secure storage, protect private keys, and comply with rules on client asset segregation and reporting. Any firm offering crypto staking services, where customers’ assets are used to validate blockchain transactions, must operate under defined standards to ensure transparency and effective risk management. The government has built in some exclusions to avoid overreach. Activities like simply developing cryptoassets, minting stablecoins, or facilitating private transfers without public solicitation won’t automatically trigger regulation. Meanwhile, overseas firms serving UK consumers could also fall within the scope of the rules if no regulated intermediary is involved. This means foreign platforms may need to comply if they directly target users in the UK. According to the Treasury, the FCA and PRA will begin issuing guidance soon, with final legislation expected later this year. UK cracks down on illicit activities The draft proposals build on years of regulatory groundwork and come just months after the FCA had already mapped a phased plan toward full regulation by 2026, including stablecoin oversight, anti-market abuse measures, and lending regulations. UK regulators have stepped up crypto enforcement in the meantime. In April 2024, new powers under the Economic Crime and Corporate Transparency Act came into effect, giving authorities the ability to freeze suspicious crypto wallets for up to three years, even before any charges are filed. Since then, around £6 million ($7.7 million) worth of crypto has been frozen by law enforcement , HMRC, and police, according to a MailOnline investigation. The post UK crypto firms to face stricter rules under proposed regulatory framework appeared first on Invezz

Source: Invezz