The United Kingdom has published draft legislation to bring cryptocurrency firms under formal financial regulation, marking one of the most significant steps the country has taken to establish a comprehensive framework for digital assets. The announcement was made by Chancellor Rachel Reeves at a major summit in London to mark UK Fintech Week.

A New Regulatory Perimeter for Crypto

Under the proposed rules, crypto exchanges, dealers and agents serving UK customers will be brought within the country's financial services regulatory perimeter. Firms will be required to meet clear standards on transparency, consumer protection and operational resilience, obligations that mirror those already imposed on participants in traditional financial markets.

The move comes as crypto ownership in the UK has grown sharply. Research by the Financial Conduct Authority found that approximately 12 percent of UK adults owned crypto in 2024, up from just 4 percent in 2021. Despite this growth, consumers have frequently been left exposed to risky firms and scams, a gap the new framework is designed to close.

Chancellor Signals Transatlantic Cooperation

Alongside the domestic legislation, Reeves revealed that the UK and the United States will use the upcoming UK-US Financial Regulatory Working Group to continue discussions on supporting the responsible growth of digital assets. The announcement follows talks in Washington between Reeves and US Treasury Secretary Scott Bessent, where both sides explored opportunities for greater collaboration on digital securities.

Among the ideas under consideration is a proposal put forward by US Securities and Exchange Commission Commissioner Hester Peirce for a transatlantic sandbox for digital securities. Such a mechanism would allow firms to test innovative products across both jurisdictions under a coordinated regulatory framework.

Britain Open for Business, Closed to Fraud

Speaking at the summit, Reeves framed the legislation as central to the government's Plan for Change, which aims to make Britain the most attractive destination in the world for financial innovation. "Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK," she said. "Today's announcement sends a clear signal: Britain is open for business, but closed to fraud, abuse, and instability."

The government also confirmed it will publish the first-ever Financial Services Growth and Competitiveness Strategy on 15 July, alongside the Chancellor's Mansion House speech. Fintech has been identified as a priority sector within that strategy, with the government aiming to use the sector to finance investment and growth across the broader UK economy.

Industry Engagement Before Final Legislation

The government has indicated it will bring forward final cryptoasset legislation at the earliest opportunity, following a period of engagement with industry on the draft provisions. The 2023 Treasury consultation had already proposed bringing a wide range of cryptoasset activities, including exchanges and custody services, within the UK's financial services regulatory perimeter.

For crypto firms operating in or targeting the UK market, the publication of the draft legislation represents a clear signal that the window for operating outside formal regulatory oversight is closing. The government has stated its commitment to making the UK a global hub for digital asset technologies, but has made clear that this ambition will be pursued within a framework designed to protect consumers and maintain financial stability.