Nikolas Sargeant
The UK Treasury is developing regulatory framework legislation to bring cryptocurrency markets under Financial Conduct Authority supervision beginning in October 2027, positioning Britain alongside the European Union and United States in establishing formal oversight of digital asset services.
Digital assets will be regulated similarly to traditional financial products under the forthcoming legislation, the finance ministry confirmed in a Monday statement. Chancellor Rachel Reeves said the regulatory structure would provide "clear rules of the road" while keeping "dodgy actors" out of the market and delivering "strong consumer protections" for participants.
"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," Reeves stated. The Treasury plans to introduce a draft bill in Parliament today outlining the regulatory framework's core provisions.
The European Union implemented similar legislation through its Markets in Crypto-Assets (MiCA) regulation one year ago, while the United States continues advancing its own regulatory approach to digital asset oversight. Britain seeks collaboration with US authorities to foster coordinated crypto regulation and innovation through the "Transatlantic Taskforce," reflecting efforts to harmonize cross-border regulatory standards.
The proposed rules would place cryptocurrency firms—including exchanges, custodians, and digital wallet providers—under FCA jurisdiction, subjecting crypto services to the same regulatory standards governing traditional financial products, including transparency requirements and consumer protection mandates.
Lucy Rigby, minister for the City of London, said the new framework "will give firms the clarity and consistency they need to plan for the long term," addressing longstanding industry requests for regulatory certainty that has influenced some businesses to relocate operations to jurisdictions with established digital asset regulations.
Recent data from the FCA shows approximately 12% of UK adults hold some form of cryptocurrency, a figure that has risen steadily in recent years as digital asset adoption has expanded beyond early enthusiasts into broader consumer markets. The growing retail participation has increased pressure on authorities to implement comprehensive investor protections.
Britain formally recognized Bitcoin and cryptocurrency assets as legal property under new parliamentary legislation earlier this year. Under that law, digital assets can be owned, inherited, and recovered through legal mechanisms, providing clearer property rights framework for cryptocurrency holders and establishing precedents for dispute resolution.
The FCA is separately developing specific rules addressing trading practices, market abuse prevention, custody standards, and token issuance requirements. The Bank of England unveiled proposals for stablecoin regulation last month, focusing on reserve requirements and redemption mechanisms for digital currencies pegged to traditional assets like the British pound.
Both the Bank of England and FCA have committed to finalizing their respective regulatory frameworks by the end of 2026, providing industry participants approximately one year to prepare for compliance implementation before the October 2027 enforcement date.
The regulatory push follows a period of market turbulence and numerous digital asset fraud schemes affecting UK consumers. Official banking industry data indicates money lost to cryptocurrency investment scams by UK consumers surged 55% over the past year, highlighting vulnerabilities in the current unregulated environment.
Ministers are also developing proposals to ban cryptocurrency political donations, citing concerns about unverifiable origins and ownership structures that could enable circumvention of existing campaign finance transparency requirements. The potential prohibition reflects broader governmental concerns about cryptocurrency's role in financial systems lacking traditional accountability mechanisms.
The October 2027 implementation timeline provides the industry an extended transition period compared to some international jurisdictions that have moved more rapidly. However, industry observers note the comprehensive scope of Britain's approach may require substantial operational adjustments from cryptocurrency businesses currently operating without formal regulatory oversight.
