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Chancellor of the Exchequer Rachel Reeves has announced new crypto rules, where crypto exchanges, dealers, and others will be brought into the regulatory perimeter. Clear regulation is vital to allow digital asset technology to develop responsibly.
In a public statement, Reeves noted that new rules will provide customers with confidence while mitigating fraud risks. Legislation is in the works as crypto usage, including investing, has jumped from 4% in 2021 to 12% in 2024.
Reeves shared that recent discussions have taken place with the US to coordinate the usage and responsible growth of digital assets.
During the Biden Administration, crypto was anathema. Everything changed when Donald Trump was elected President, as he has firmly embraced digital asset innovation.
With regulators and Congress under Republican control, it is nearly certain that new rules will be introduced, most likely this year. Working with global jurisdictions makes sense to pursue harmonized regulation. Fragmentation can delay development and undermine the benefits of distributed ledger technology. Clarity between jurisdictions simplifies the compliance process.
Reeves said that discussions with US Secretary of the Treasury Scott Bessent included shared opportunities to support digital asset innovation, and the proposals suggested by SEC Commissioner Hester Peirce, head of the SEC’s Crypto Task Force, will be reviewed.
“Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK,” stated Reeves.
Supporting digital assets is part of a broader theme of declaring the UK is business-friendly, and the UK government aims to make the UK a global crypto hub. Crypto is part of the Fintech sector, which has been recognized as a key component of the UK economy.
Stablecoins are described as having the potential to play a significant role in payments, including wholesale and retail activities.
Legislation is expected to be made available at the “earliest opportunity.”
Tokenized securities and contractually based investments are said to be within the scope of the existing regime for specified investments and thus will ensure the FCA can make rules to address the specific risks associated with digital asset technologies.
Dima Kats, CEO and Founder of Clear Junction, commented on the announcement, calling Reeves’ announcement a welcome development that brings the UK closer to establishing a framework for crypto.
“For those of us who’ve spent years navigating fragmented global rules, it represents real progress, though much will depend on the detail. Key questions remain, particularly around equivalence and cross-border access,” said Kats.
He added that regulators have a challenging task, as the crypto industry is evolving rapidly and can be complex, not to mention DeFi and the rise of stablecoins.
“Crafting rules today for technologies that are still in flux, and doing so through consultation that ensures those rules remain relevant when implemented, is no small feat. Traditionally, regulators have had to strike a balance between supporting innovation and protecting consumers. But today, they also face the added challenge of navigating a shifting geopolitical context, with increasingly polarised views on regulation emerging between the EU and US,” Kats stated.
The “near final” document, The Future financial services regulatory regime for cryptoassets, is viewable here.