UK Government Unveils Draft Legislation for Cryptocurrency Regulation

The UK government has announced draft legislation to regulate cryptocurrency exchanges, dealers, and agents for the first time, aiming to curb misconduct while fostering legitimate innovation in the crypto-asset sector. The new regulations, unveiled by Finance Minister Rachel Reeves, will require crypto firms operating in the UK to comply with standards for transparency, consumer protection, and operational resilience. As of now, approximately 12% of UK adults have engaged with cryptocurrencies, a significant rise from only 4% in 2021. This burgeoning interest has prompted the government to take action, with the legislation expected to be finalized by the end of 2025.

While this initiative is anticipated to bring more structure to the crypto landscape, critics warn that regulation could create a misleading sense of safety around inherently risky assets. Bank of England Governor Andrew Bailey has expressed skepticism about Bitcoin but acknowledges the necessity of regulating stablecoins. In her July 15 Mansion House speech, Reeves also discussed the importance of regulatory collaboration with U.S. Treasury Secretary Scott Bessent, alongside plans to outline a broader financial services growth strategy, emphasizing the significance of financial services to the UK’s industrial strategy.

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