The UK Treasury is drafting fresh rules to oversee cryptocurrency markets.
Cryptocurrencies are set to be regulated in a manner similar to other financial products, with new legislation coming into effect in 2027. The Treasury is developing standards that crypto firms must meet, overseen by the Financial Conduct Authority (FCA).
Ministers aim to reform the crypto sector, which has grown rapidly as a means of investing and making payments. Historically, cryptocurrencies have not faced the same Regulation as traditional financial products like stocks and bonds, leaving many consumers with fewer protections.
The government says the forthcoming rules will boost transparency, enhance consumer protection, improve the ability to spot suspicious activity, enable sanctions, and hold companies accountable.
Chancellor Rachel Reeves called bringing crypto within the regulatory perimeter a key step to securing the UK’s status as a leading financial hub in the digital era. She said the measures would provide firms with clear guidelines, encouraging investment, innovation, and the creation of high-skilled jobs in the UK, while offering strong consumer protections and excluding unethical actors from the market.
Crypto companies — including exchanges and digital wallets — will need to register with the FCA if their services fall under the UK’s money-laundering regulations. The Treasury’s proposed changes would place crypto service providers under the FCA’s oversight, subjecting their activities to the same transparency standards as other financial products.
Lucy Rigby, the City of London minister, remarked that the UK should be a top destination for crypto firms seeking growth. The new rules, she said, would provide long-term planning clarity and consistency for these firms.
The cryptocurrency market has faced volatility amid investor concerns of an artificial intelligence-driven bubble. In October, banking sector data showed UK consumers lost a substantial amount to investment scams, with fake crypto schemes at the forefront.
A notable case involved Zhimin Qian (also known as Yadi Zhang), a Chinese national living in the UK who admitted a multibillion-pound bitcoin fraud. Between 2014 and 2017, the scheme defrauded 128,000 people. Qian stored the proceeds in bitcoin; UK authorities later seized 61,000 bitcoins from a Hampstead mansion in 2018, a seizure police call the world’s largest cryptocurrency confiscation. Qian pleaded guilty to acquiring and possessing cryptocurrency that constituted criminal property.
Additionally, ministers are preparing to prohibit political donations made with cryptocurrency, amid concerns about tracing origin and ownership.
Reform UK — Nigel Farage’s party — reportedly became the first major party to accept digital currency contributions this year and has launched a crypto donation portal with enhanced verification. In a notable development, Reform UK received a £9 million donation from Christopher Harborne, a cryptocurrency investor based in Thailand — the largest single donation from a living person to a British political party this autumn.
