The UK government has just announced the most significant cryptocurrency bill to date, marking a strong step towards making the UK a global fintech and crypto hub, while also ensuring consumer safety and building investor trust.


The UK tightens regulations – but to promote development, not to stifle it


The 27-page draft is part of the UK government's Innovation Plan, built on the Financial Services and Markets Act 2000, which will redefine crypto assets, such as stablecoins, and bring related activities into the formal legal framework.


Accordingly, crypto exchanges, brokers, and custodians will officially become regulated entities, with requirements similar to those for traditional financial institutions, including:



  • Transparency in operations



  • Protecting consumers



  • Ensuring stable operational capabilities, risk prevention




Speaking about this change, UK Chancellor of the Exchequer – Ms. Rachel Reeves – affirmed:



“With the Innovation Plan, we are making the UK the best place to create – and the safest for consumers. Strong regulations on crypto will enhance investor confidence, boost the fintech sector, and protect the people of the UK nationwide.”



The new law will 'restore order' and support innovation


The bill also emphasizes preventing bad actors by bringing all crypto service provision activities into the framework – thereby eliminating non-transparent entities, those engaging in fraud, or those posing high risks. Concurrently, legitimate, reputable companies will be facilitated to develop innovation sustainably.


This is not only significant internally but also opens up opportunities for international cooperation. Previously, Minister Reeves had an important discussion with US Treasury Secretary – Mr. Scott Bessent – to enhance bilateral cooperation in the digital asset sector.


The number of crypto holders in the UK has tripled in three years


The necessity of a new legal framework arises from the rapid adoption of cryptocurrencies in the UK. According to a report from the UK Financial Conduct Authority (FCA), by August 2024:



  • About 12% of the UK population has owned cryptocurrency



  • A significant increase compared to just 4% in 2021




This shows that the crypto market is no longer a playground for a minority but is approaching becoming a part of the mainstream financial system. Having a clear, understandable, and updated legal framework will help protect millions of new investors while paving the way for large organizations to participate legally and safely.


The difference of the UK compared to many countries


In the context of many countries struggling to regulate crypto or pursuing overly stringent controls, the UK is choosing a balanced path:



  • Not suppressing, but not loosening



  • Not viewing crypto as a 'wild market', but also not treating it like conventional stocks




Clearly defining stablecoins and crypto assets as 'regulated investment types' is a key step that could set a precedent for other countries to follow.


The bill is still in the stage of gathering feedback from the industry and the public to amend shortcomings before presenting the final version.



Impact on the cryptocurrency market and global users


If passed and implemented as expected, the UK could become the first G7 country to have a comprehensive legal framework for cryptocurrency. This will:



  • Creating a strong impetus for reputable crypto companies to establish headquarters and expand operations in the UK



  • Boosting investor confidence globally, especially as markets like the US are still divided in policy



  • Increasing pressure on other countries to establish similar legal frameworks to avoid falling behind




For crypto users worldwide, transparency and legal protection are prerequisites for安心 long-term investment, especially in the context of a market still rife with risks from scams, hacks, or 'ghost' projects.



Although we still have to wait for the official version, what the UK government is doing shows that crypto is no longer an 'outlier' area, but is becoming the center of global financial innovation. Investors, businesses, and savvy users should proactively prepare for the era of legalized and appropriately controlled crypto – which will change the entire game in the near future.


Note: The cryptocurrency market always carries high risk. Investments should be made cautiously, knowledgeably, and should not rely solely on short-term profit expectations.