The UK Treasury is preparing to introduce new rules aimed at regulating the cryptocurrency market, drawing closer parallels with traditional financial products. Under proposed legislation, cryptocurrencies will be brought into the ‘regulatory perimeter,’ with rules set to come into effect by 2027. This move is part of a broader effort to ensure that crypto companies meet higher standards, overseen by the Financial Conduct Authority (FCA).
Treasury officials have expressed concerns over the rapid growth of the cryptocurrency market, which has become a popular tool for investment and payments, but has largely operated outside the rigorous oversight applied to traditional financial products like stocks and shares. As a result, consumers in the crypto space have lacked the same protections that investors in more conventional markets enjoy.
By introducing the new regulations, the government aims to improve market transparency, bolster consumer confidence, and make it easier to detect and address suspicious activity. This would include enhanced mechanisms for imposing sanctions and holding companies accountable.
Chancellor Rachel Reeves stressed the importance of these regulations in securing the UK’s standing as a global leader in the digital economy. “Bringing crypto into the regulatory perimeter is a crucial step in ensuring the UK’s position as a world-leading financial centre in the digital age,” she said. “These clear rules will provide the certainty firms need to innovate and invest here, creating high-skilled jobs and protecting consumers while locking out bad actors from the market.”
As part of the new framework, crypto companies—including exchanges, digital wallets, and other crypto services—will be required to register with the FCA if they provide services covered under the UK’s anti-money laundering regulations. These companies will also be subject to the same transparency standards as traditional financial products.
Lucy Rigby, Minister for the City of London, emphasized the importance of creating a stable environment for the growth of crypto assets in the UK. “We want the UK to be the top destination for crypto firms looking to expand. These new rules will provide the clarity and consistency they need to plan for the long term,” she said.
Despite growing interest in digital currencies, the cryptocurrency market has faced turbulence, partly due to rising investor concerns about potential artificial intelligence (AI) bubbles. Data from the UK banking industry in October revealed a 55% increase in the amount of money lost to investment scams, with cryptocurrency-related fraud thought to be a leading culprit.
One high-profile case involved Zhimin Qian, a Chinese woman living in the UK who was convicted of a multi-billion-pound bitcoin fraud. Between 2014 and 2017, Qian orchestrated a scam in China that affected 128,000 people. Authorities made a breakthrough in 2018 when they raided a mansion in Hampstead and seized 61,000 bitcoins—worth over £5bn at current prices—believed to be the largest single cryptocurrency seizure in the world. Qian pled guilty to acquiring and possessing criminal property at Southwark Crown Court in September.
Ministers are also considering plans to ban political donations made with cryptocurrency, citing concerns over the transparency of the source and ownership of such donations. Reform UK, led by Nigel Farage, became the first UK political party to accept cryptocurrency donations earlier this year. The party has set up a crypto portal to facilitate these contributions and says they are subject to enhanced checks.
This autumn, Reform UK received a £9m donation from Christopher Harborne, a cryptocurrency investor based in Thailand, marking the largest donation by a living person to a UK political party.
As the UK moves to regulate the cryptocurrency market, the government hopes to strike a balance between fostering innovation in digital finance and ensuring adequate safeguards for consumers and investors.
Source: The Guardian
Bd-pratidin English/ Jisan
