The United Kingdom has unveiled a comprehensive set of draft rules for cryptocurrency, aligning digital assets with existing securities laws in a bold move to position the nation as a global "safe harbor" for the industry.
New UK Crypto Rules Hailed as a "Net Positive"
Industry experts have largely welcomed the proposed regulatory framework. Vugar Usi Zade, Chief Operating Officer at Bitget exchange, expressed significant optimism, stating the draft is a "net positive for the industry as a whole."
"A key challenge has been the uncertainty," Zade explained. "Many firms have hesitated to enter or have even exited the UK market because the requirements for FCA authorization were unclear. This draft finally provides a clear definition of 'qualifying crypto assets' and explicitly outlines which activities—trading, custody, staking, or lending—require formal authorization from the Financial Conduct Authority (FCA)."
For exchanges like Bitget, the draft rules mandate that they must obtain full approval from the FCA to offer services such as trading, custody, staking, or lending to UK-based users. The proposals also include a two-year adaptation period, allowing companies time to adjust their capital structures and reporting systems.
"Aligning each business line with the new framework does increase compliance costs," Zade acknowledged. "However, this regulatory clarity allows us to confidently plan product launches and invest in local infrastructure for the long term."
Stablecoins Reclassified and a Push for Predictability
A pivotal aspect of the new draft is the reclassification of stablecoins. They are now categorized as securities rather than electronic money. This means GBP-backed tokens issued within the UK must meet stringent disclosure requirements, similar to those in a prospectus, and implement robust redemption mechanisms. Non-UK stablecoins can still circulate but will be restricted to trading on authorized venues.
Zade noted that excluding stablecoins from the 2011 Electronic Money Regulations (EMRs) could slow their adoption for everyday payments by denying them access to certain regulatory sandboxes.
Conversely, Dante Disparte, Chief Strategy Officer at Circle, the issuer of the USDC stablecoin, emphasized that predictability is the cornerstone of a healthy digital asset ecosystem. "By articulating a clear willingness to provide regulatory clarity, the UK is positioning itself as a safe harbor for responsible innovation," Disparte stated.
He added that this proposed framework offers the "predictability necessary to develop a reliable digital financial infrastructure within the UK." The ultimate goal is a stable environment where companies can build, test, and grow responsibly without fear of arbitrary enforcement or shifting regulatory goals—a potential milestone for the UK's digital asset journey.
Key Requirements for Foreign Firms and Staking Services
One of the most significant changes is the expansion of regulatory territorial scope. Non-UK platforms servicing retail customers in Britain will now be required to secure authorization from the FCA. The "overseas persons" exemption is limited to specific business-to-business (B2B) relationships, effectively creating a protective barrier around the UK retail market.
Crypto staking activities have also been formally brought into the regulatory fold. Providers of liquid staking and delegated staking services must now register. However, independent stakers and pure interface providers are exempt. New custody rules extend to any setup that grants a single party unilateral transfer rights, including certain lending and Multi-Party Computation (MPC) arrangements.
"Some regulatory details for decentralized finance (DeFi) still need refinement," commented Bitget's Zade. "But the direction is clearly towards efficient, tailored compliance requirements rather than broad restrictions."
He pointed out that the broadly defined concept of "staking" could potentially encompass non-custodial DeFi models that lack a centralized service provider. Furthermore, he suggested that proposed credit card purchase limits, though aimed at mitigating high-risk scenarios, might inadvertently stifle retail participation in token offerings.
Zade also highlighted that bank-level client asset segregation rules could place a heavy burden on leanly-operated DeFi projects. "The final rules will need adjustments to mitigate these side effects," he concluded.
The FCA is scheduled to publish the final regulatory rules for the crypto sector in 2026, laying the groundwork for the formal implementation of the UK's regime. This roadmap for a clear regulatory framework may follow a path similar to the European Union's Markets in Crypto-Assets (MiCA) regulation, which began its rollout in December 2023.
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Frequently Asked Questions
What is the main goal of the UK's new crypto draft rules?
The primary objective is to provide clear regulatory clarity for the digital asset industry, aligning crypto with traditional securities laws. This aims to protect consumers, combat illicit finance, and position the UK as a leading global hub for responsible crypto innovation.
How do the new rules affect stablecoins?
The draft rules reclassify stablecoins as securities, not electronic money. UK-issued fiat-backed stablecoins will face stricter disclosure and redemption rules. Foreign stablecoins can still be traded but only on platforms authorized by the FCA.
Do these rules apply to foreign cryptocurrency companies?
Yes. A major change is that any foreign company offering services to UK retail consumers must now seek authorization from the UK's Financial Conduct Authority (FCA), significantly expanding the scope of the regulations.
What about cryptocurrency staking?
The new regulations bring staking services, specifically liquid staking and delegated staking, under regulatory oversight. Providers of these services will need to register with the FCA, though independent stakers are exempt.
When will these rules become official?
The FCA is currently consulting on the draft rules. The final regulatory framework is expected to be published and come into effect in 2026, giving companies a timeline for adaptation and compliance.
How does this compare to EU's MiCA regulation?
The UK's approach appears to be building a similarly comprehensive framework to the EU's MiCA. Both seek to create a standardized set of rules across a major economic area, though the UK's specific requirements, particularly around stablecoins and foreign firms, have their own distinct characteristics.