UK Government Finally Releases Comprehensive Draft Legislation for Bitcoin and Crypto Firms
The UK government has finally released a comprehensive draft legislation aimed at regulating the services of Bitcoin and crypto-focused firms.The announcement came today, April 29, during a summit held in London as part of UK Fintech Week. Chancellor Rachel Reeves presented the new rules, which look to encourage innovation in the digital asset scene while ensuring investor protection and market integrity.UK Government Presents Bitcoin and Crypto Regulation DraftNotably, the proposed regulations mark a step forward in the government's broader "Plan for Change" economic initiative. These rules will now formally bring crypto firms, ranging from exchanges to service agents, under the same regulatory expectations as traditional financial institutions. This move looks to close existing gaps that have allowed fraudulent or unstable operations to thrive in recent years. With an estimated 12% of UK adults holding crypto assets like Bitcoin and Ethereum, the need for stronger consumer safeguards has become more pressing. The draft legislation presents stringent standards for transparency, operational resilience, and consumer protections, mandating compliance from all crypto service providers operating with UK customers. Specifically, the framework ensures that these firms adopt robust practices similar to those required in traditional finance.International Coordinated EffortsIn addition, the announcement also highlighted international coordination efforts. Chancellor Reeves disclosed that the UK has initiated discussions with the United States to develop shared principles for the responsible development of digital assets. These talks, which included meetings in Washington with U.S. Treasury Secretary Scott Bessent, explore opportunities for cross-border cooperation, including a potential transatlantic sandbox for digital securities as suggested by SEC Commissioner Hester Peirce. In her remarks, Reeves stressed that while the UK remains open to innovation and technological advancement, it will not tolerate misconduct, fraud, or regulatory evasion. She also announced that the government will reveal a Financial Services Growth and Competitiveness Strategy on July 15. Notably, this would set the direction for long-term development in sectors like fintech, which plays a major role in the country's investment and growth strategy.UK's Historical Push for Crypto RegulationsThis draft legislation follows several years of growing policy and regulatory preparations. The Financial Conduct Authority (FCA) had previously outlined a roadmap toward full regulation by 2026, involving a phased approach to issues such as stablecoin oversight, market abuse prevention, and crypto lending. Meanwhile, in late 2024, the government announced intentions to consolidate crypto regulation into a single framework and began engaging with industry on draft provisions.Earlier measures also sought to solidify the legal status of digital assets in the UK. A proposal in September 2024 under the Labour government aimed to classify assets such as NFTs and cryptocurrencies as property. This was to allow for clearer legal protections and the recovery of stolen digital assets through the courts.The UK's latest push toward finally regulating the local crypto industry comes on the back of increased engagement in the U.S., where the Trump administration has promised to outdo years of regulatory uncertainty that plagued the industry. So far, the U.S. Congress has passed bills to allow banks to engage with the crypto sector, as well as stablecoin laws.
Text source: The Crypto Basic
