UK Announces New Crypto Rules To Attract More Investment

Just this week, the UK government made an announcement set to change how it views and protects crypto-assets.

In the press release uploaded on gov.uk, the government announced plans to set out clear sector regulations in order to give companies more clarity and consumers more protection in the space.

Under these new rules, crypto companies will be regulated in the same way as other financial services providers, overseen by the UK’s Financial Conduct Authority (FCA).

According to the release, the move is designed to “Make the UK a global destination for digital assets and attract more investment.”

But is more regulation what the industry needs? Or does it just bring up a whole new host of challenges for crypto businesses operating in the UK?

What Is Changing?

The new rules, which will come into play in 2027, will see cryptocurrencies regulated in the same way as stocks and shares.

This means that crypto exchanges, wallets and others will need to meet FCA standards. Whilst some firms might already be registered, the new rules go a step further by protecting consumers and “locking dodgy actors out of the UK market”.

Chancellor of the Exchequer, Rachel Reeves MP, said: “Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world leading financial centre in the digital age.

“By giving firms clear rules of the road, we are providing the certainty they need to invest, innovate and create high skilled jobs here in the UK, while giving millions strong consumer protections, and locking dodgy actors out of the UK market.”

Economic Secretary to the Treasury, Lucy Rigby KC MP, said: “We want the UK to be at the top of the list for cryptoassets firms looking to grow and these new rules will give firms the clarity and consistency they need to plan for the long term.”

Why Now?

Investing in crypto has become much more popular over the past few years.

Once something only known by those on the dark web, many are now investing in crypto as a long-term asset. The problem? Regulation lagged behind, especially as countries couldn’t keep up with how quickly the crypto market was growing.

The problem is that whilst crypto created a way for people to invest outside of regulatory systems, it also left them vulnerable to cyberattacks, in fact, figures released by Action Fraud revealed that in 2024 over 17,000 reports were submitted by UK victims of crypto investment fraud. And as crypto becomes more mainstream, that number is only going to increase.

From the government, their argument is that introducing these regulations will bring in more protection and make the UK a global crypto hub. But is that true?

Making The UK A Global Crypto Hub

Aside from protecting UK investors, the government also wants the UK to become a more attractive destination for crypto businesses.

Their argument is that if the regulations are clear, businesses will be more incentivised to come as they will know the lay of the land. The question is whether regulation is actually attractive, or whether it might have the opposite effect, with businesses looking to operate more in legally grey crypto economies.

The reality is for crypto businesses, a lot more regulation will now fall on them. But is it good or bad?

The Pros Of The New Crypto Regulations

Whilst most companies would probably agree that more regulations aren’t always a good thing, there are definitely some benefits, such as:

More clarity around legals: Making it easier to plan long-term scale without needing to worry about surprise changes and new rules.

Better access to capital: Those who have previously been wary of crypto due to a lack of regulation may decide to pile in now that the rules are more set.

More trust: Consumers are more likely to trust crypto companies if they know they are regulated.

Positioning the UK as a crypto hub: Rather than banning crypto, the UK is choosing to grow the sector, albeit in a regulated way.

The Cons Of The New Crypto Regulations

But it’s not all hunky dory. There are some limitations too such as:

More compliance: When businesses are regulated, they usually need to spend more time and money on compliance. This could be a burden too big to bear for smaller businesses who may not have the capital to scale.

Some uncertainty in the meantime: Whilst the rules post-2027 are clear, many might be wondering what to do in the meantime and how regulations will affect them.

Longer to get to market: Part of the joy of crypto is that it’s experimental and reactive, with so many new hoops to jump through, the sector might experience much less experimentation.

A New Crypto Landscape For The UK

The UK’s decision to regulate crypto assets in the same way as other financial assets definitely gives businesses a clearer space to operate in, but it could also make it harder for smaller businesses to innovate.

However, with regulations not due to come in till 2027, it will be interesting to see whether these new rules do bring more investment in, or whether crypto firms prefer economies that still operate in legal grey areas.

Will the UK become one of the world’s leading crypto economies? Or will new regulations just deter innovation? We wait and see.