The UK government has published draft legislation that would, for the first time, bring crypto asset services—such as exchanges, brokers, and custody providers—under the umbrella of financial regulation. The announcement was made by the Chancellor during a high-profile summit held in London as part of UK Fintech Week.

If enacted, the new rules will apply to any firm providing crypto-related services to UK customers, regardless of whether the business is based domestically or overseas. These firms would be expected to adhere to standards on transparency, consumer protection, and operational resilience—bringing them in line with traditional financial services providers.

A Step Towards Greater Oversight

This legislative proposal follows a 2023 consultation by the Treasury and is a key component of the government’s broader “Plan for Change” strategy. The initiative aims to foster innovation in financial services while ensuring a safer and more reliable environment for consumers. It also reinforces the UK’s ambition to remain a leading hub for digital finance.

Context and Implications

Research by the Financial Conduct Authority (FCA) shows that approximately 12% of UK adults currently own or have owned cryptoassets, up significantly from 4% in 2021. While adoption has surged, the industry has also faced a number of high-profile failures and fraudulent schemes, prompting calls for tighter regulation.

In practice, firms engaging with UK customers in the crypto space should prepare for increased compliance obligations and oversight, potentially from regulators such as the FCA.

International Collaboration

The Chancellor also highlighted forthcoming collaboration with US regulators, including discussions around a potential “transatlantic sandbox” to explore joint regulatory approaches to digital securities. This follows meetings between UK and US officials earlier in the year held in Washington.

What Happens Next?

The government is now inviting feedback on the draft legislation before final measures are introduced. Additionally, the Chancellor confirmed that the government will unveil a Financial Services Growth and Competitiveness Strategy on 15 July, coinciding with the Mansion House speech. This strategy aims to support long-term growth and innovation within the financial services sector.

These developments mark a significant shift for businesses operating in, or considering entering, the cryptoasset industry.

See: New cryptoasset rules to drive growth and protect consumers