UK leans towards the US approach for cryptocurrencies
The UK government has unveiled draft legislation aimed at tightening the reins on cryptocurrency operations within its borders. The move signals the country’s closer cooperation with the United States instead of following the European Union’s approach to digital assets.
UK Finance Minister Rachel Reeves announced legislation that will extend current financial regulations to crypto companies within the country by this year’s end. The proposed rules will bring crypto exchanges, dealers, and agents under the purview of financial regulators. To put this in context, according to recent government data, 12 percent of British adults now own or have previously owned cryptocurrencies like Bitcoin or Ethereum—triple the figure from 2021.
During her recent trip to Washington, Rachel Reeves discussed crypto regulations with US Treasury Secretary Scott Bessent. Further discussions have been planned for June. Meanwhile, the finance ministry said, “Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection, and operational resilience.” Additionally, Reeves will unveil her broader strategy for revitalizing the UK’s financial services sector in her Mansion House speech this July.
UK treating crypto assets as securities
Legal experts say the UK is clearly leaning toward the US approach, treating crypto assets largely as securities—a stark contrast to the European Union’s more tailored and layered framework under its Markets in Crypto-Assets Regulation (MiCAR).
Under the new rules, stablecoin issuers based in the UK will be subject to financial regulation. These tokens, pegged to traditional currencies like the pound or dollar because they are designed to maintain a fixed value, will need to meet strict standards of reserve management and solvency. Meanwhile, Bank of England Governor Andrew Bailey has long warned about the risks of cryptocurrencies like Bitcoin. However, he has shown more support for regulating stablecoins due to their potential use in everyday transactions.
The announcement comes amid US President Donald Trump embracing cryptocurrencies and promising to cut red tape for the industry. However, in a highly anticipated speech at the White House, announcing his new strategy to boost the US economy, including new tariffs on imports from 50 countries, Trump omitted the mention of cryptocurrency. Trump’s previous campaign promised to make the US the ‘cryptocurrency capital’. However, this deregulatory approach is drawing criticism from European policymakers concerned about its global implications. Euro zone finance ministers believe the US approach could affect monetary sovereignty and financial stability.
