In a significant step toward formalizing oversight of the digital assets industry, the UK government has released draft legislation aimed at bringing cryptocurrency firms under the country’s regulatory framework. The proposed laws, unveiled by Chancellor Rachel Reeves, are part of a broader effort to enhance regulatory compliance, safeguard consumers, and foster innovation within the financial technology ecosystem.

The new framework will require crypto exchanges, brokers, and service providers operating in the UK or serving UK-based clients to comply with comprehensive rules covering consumer protection, operational resilience, and transparency standards, aligning them more closely with firms operating in the traditional financial services sector.

The announcement comes amid a sharp rise in crypto adoption across the UK, with the number of adults who currently hold or have previously held digital assets increasing from just 4% in 2021 to 12% in 2024. The government emphasized the urgent need for stronger regulatory enforcement to protect consumers from exposure to unregulated firms and fraudulent schemes.

“Robust rules around crypto will boost investor confidence, support the growth of FinTech, and protect people across the UK,” said Chancellor Reeves, highlighting the role of compliance management in driving responsible digital asset innovation.

In addition, Reeves announced that the UK and the United States will leverage the upcoming UK–US Financial Regulatory Working Group to deepen bilateral cooperation in advancing the governance, risk, and compliance (GRC) landscape for digital assets. The partnership aims to support the responsible development of the crypto industry on a global scale, with a shared focus on regulatory harmonization and cross-border regulatory intelligence.

The digital assets sector has welcomed the UK’s move toward clearer regulatory frameworks. A spokesperson for CryptoUK, a leading industry trade association, praised the announcement as a “major victory” for industry stakeholders. “Rachel Reeves’ commitment to provide new and clearer rules for the digital assets industry is very much welcomed,” the spokesperson said, noting that members have long advocated for the UK to become a global leader in RegTech innovations and digital finance.

The draft legislation positions the UK as a progressive player in the evolving global regulatory technology (RegTech) space, signaling a shift from reactive oversight to proactive, principle-based regulation. As countries around the world move to define their digital asset strategies, the UK’s approach may offer a blueprint for achieving regulatory clarity, fostering compliance automation, and strengthening financial crime prevention in the crypto sector.