UK’s Regulatory Framework for Digital Assets
On April 29, 2025, UK’s Finance Minister Rachel Reeves announced her ministry’s plan to establish a robust regulatory framework aimed at positioning the UK as a leading nation in the digital asset landscape. The initiative, as articulated by the UK Treasury, proposes that cryptocurrency exchanges, dealers, and agents be subjected to regulations akin to those governing traditional financial institutions. This includes mandates regarding transparency, consumer safety, and operational resilience.
Financial Services and Markets Act 2000 (Cryptoassets) Order 2025
Central to this regulatory overhaul is the introduction of the Financial Services and Markets Act 2000 (Cryptoassets) Order 2025, which signifies the addition of six new regulated activities to the financial rulebook, such as crypto trading, custody, and staking. Instead of adopting a more lenient approach like the EU’s Markets in Crypto-Assets (MiCA) framework, the UK intends to enforce comprehensive securities regulations on crypto activities.
“This means imposing stringent capital adequacy requirements, governance standards, and rules surrounding market conduct and disclosure.” – Wiggin, UK law firm
Industry Perspectives on Regulation
Dante Disparte, the chief strategy officer for Circle, remarked on these draft regulations, emphasizing their potential to foster a rule-based digital economy. He indicated that by providing the much-needed regulatory clarity, the UK could become a supportive environment for innovative practices in the digital asset arena.
Similarly, Vugar Usi Zade, COO of Bitget exchange, shared his positive outlook on the forthcoming regulations. He noted that the increased regulatory specificity would aid firms in understanding which aspects of their businesses—such as trading, custody, staking, and lending—require official oversight. Companies will be afforded a two-year timeline to adapt their operations to comply with the new measures, including capital requirements and reporting protocols.
Reclassification of Stablecoins and Non-UK Platform Regulations
A significant shift includes the reclassification of stablecoins as securities rather than electronic money. With this change, fiat-backed tokens issued in the UK will need to adhere to strict prospectus requirements and redemption guidelines. Although stablecoins not issued in the UK can continue to operate, their use will be restricted to authorized venues.
“The removal of stablecoins from the provisions of the Electronic Money Regulations 2011 may hinder their adoption for payment purposes.” – Vugar Usi Zade
Nevertheless, Disparte reaffirmed that a stable regulatory framework is crucial to enabling safe growth in the sector, expressing hope that these regulations could signify a transformative phase for the UK’s digital assets journey.
FCA Authorization Requirements and Staking Regulations
Moreover, a significant aspect of the proposed regulations is the requirement for non-UK crypto platforms to secure FCA authorization if they provide services to UK retail clients. This marks a shift from previous exemptions, establishing stricter controls over the UK retail market while still allowing for some B2B interactions. The regulations also extend to crypto staking activities, encompassing both liquid and delegated staking services.
Although solo stakers and purely interface-based providers may remain exempt, complexities around decentralized finance (DeFi) operations still need to be addressed. Zade pointed out that the broad definition of “staking” could unintentionally involve non-custodial DeFi frameworks that lack centralized oversight.
He also warned that proposed limitations on credit card purchases aimed at minimizing high-risk transactions might unintentionally hinder retail participation in new token launches. In light of these developments, Zade emphasized the need for adaptations to client asset segregation rules, which could impose significant constraints on smaller DeFi projects.
Looking Ahead to 2026
The FCA is slated to release the final regulations in 2026, laying the foundational structures for the UK’s updated regulatory environment. This move may mirror the EU’s implementation of its MiCA framework beginning in December.
