UK Crypto Rules Lag Behind EU, U.S. as Firms Shift Focus

The UK government has unveiled a new regulatory framework designed to bring digital assets under the full supervision of the Financial Conduct Authority (FCA). The initiative, announced in late 2025, marks a significant shift in the UK's approach to crypto regulation, aiming to bolster consumer protection and combat financial crime while fostering a more predictable environment for businesses according to a report. Under the proposed rules, a broad range of crypto-related activities will fall under FCA licensing requirements, aligning them with traditional financial services for the first time.

The new regime will focus on activities currently outside existing financial regulations, ensuring they are subject to licensing and conduct rules similar to those governing conventional markets. This includes crypto exchanges, custody services, and stablecoin issuance, which will now face stricter oversight as research shows. The UK Treasury emphasized that the move is part of a broader strategy to position the country as a global leader in digital finance, enhancing transparency and investor confidence.

Chancellor Rachel Reeves stated that the reforms will help secure the UK's status as a world-leading financial center by providing clarity to firms and strong protections to consumers according to the Guardian. Meanwhile, the UK's regulatory progress has sparked mixed reactions from the industry, with some welcoming the structured approach and others criticizing the slow pace of implementation and lack of clarity in certain areas such as stablecoin licensing and territorial scope according to industry analysis. Critics argue that the UK's fragmented and delayed process has allowed other jurisdictions like the EU and the U.S. to gain a regulatory edge.