During an announcement at the UK Fintech Week summit, Chancellor Rachel Reeves confirmed the ‘Plan For Change’ to make the country “the best place in the world to innovate”.
These new rules around what the UK government classifies as ‘cryptoassets’ seek to provide investors and companies with clear rules on how to distribute and sell digital assets, bringing them under regulatory oversight for the first time.
The UK is also seeking to stamp out bad actors in the highly volatile crypto market, which saw two notorious high-profile collapses in 2022 with FTX and TerraLuna, and enforce regulations and guidelines to better protect consumers.
Crypto firms operating in the UK must adhere to these new standards, which include offering more transparency to customers, clear guidelines on the risks of crypto and digital asset investment and rules regarding which cryptoassets are deemed suitable for the UK market.
Reeves commented: “Through our Plan for Change, we are making Britain the best place in the world to innovate – and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.”
A long time coming?
Many within the UK crypto sector believe these new rules have been a long time coming due to the country hosting a large and valuable crypto sector, one which is becoming increasingly interlinked with its finance and fintech sectors. However, formulation of a concrete crypto framework has been held back by successive leadership transitions in government.
The Labour government, which came to power last year, has been rolling out a policy of financial deregulation, hoping to foster growth and investment. Despite this, crypto has been lacking a coherent regulatory framework for some time.
The Financial Conduct Authority (FCA) has oversight of which crypto companies can enter the country, often requiring interested companies to apply for an Electronic Money Institution (EMI) licence. The FCA have also rolled out certain provisions for crypto and digital asset rules to abide by, mostly centred around consumer protection.
Despite enforcement from the FCA, Reeves challenged its regulatory oversight, believing it has been too restrictive in enabling digital asset firms to grow in the country and reiterated Labour’s financial policies that “regulation must support business, not hold it back”.
Former Prime Minister Rishi Sunak was a keen advocate for crypto and campaigned to make the UK a global leader in the space. This comes after the FCA found that 12% of UK adults owned crypto in 2024, a 4% increase from 2021.
While HM Treasury mulled back-and-forth over various cryptoasset and stablecoin legislations, the Plan For Change rules laid out by the Labour administration demonstrates the most apparent commitment from a UK government to provide meaningful regulations across the sector.
The new rules also builds off the back of the passing into law of the amended Financial Services and Markets Act 2023, that granted new powers to design rules and regulations surrounding cryptoassets.
Stability for stablecoin growth?
One of the major aspects of the UK’s new rules surrounding cryptoassets is stablecoins, which have been surging in interest and usage from across the global financial market. This has not gone unnoticed by the UK government, which has clarified guidelines for stablecoin issuers looking to enter the UK market.
Under the new proposals set about by the Plan For Change is for international stablecoin issuers outside of UK borders to have more leniency when it comes to entering the market.
This bodes well for the likes of Tether’s USDT and Circle’s USDC stablecoins, which dominate the increasingly valuable stablecoin market and can reach a wider range of prospective buyers, investors and users.
UK policymakers, despite their hesitancy for full scale adoption of cryptocurrencies, have signalled interest in wider stablecoin adoption and use cases. Political leadership, like the banking sector, is taking note of stablecoins’ payments potential, specifically due to their speed of transaction and low remittance fees for cross-border settlement.
Aligning with US interests
US President Donald Trump has made it no secret he wants the US to become the world leader in crypto and digital assets, and now it appears that the UK is open to working alongside its transatlantic counterparts to help formulate its own regulatory framework.
One of Prime Minister Keir Starmer’s intentions during his first visit to the White House to meet with Trump earlier this year was to lay down a benchmark for US-UK collaboration on next-generation growth areas like crypto and AI to maintain the two countries’ positions as “leaders together in so many areas”.
Both political leaders have shared a similar stance to descaling regulatory provision over their respective financial markets. With the UK now setting its sights on launching its crypto regulatory regime later this year, it may look to further collaboration with f US policymakers and finance stakeholders while it continues to build out its own regulatory framework.
