The government has announced a new regulatory regime for cryptocurrencies in the UK.
In a statement of potential interest to people investment planning in Cheshire, the Chancellor of the Exchequer, Rachel Reeves, announced that crypto will become subject to compulsory regulation.
The Treasury has signalled that it aims to cooperate with the US in aligning the two countries’ digital assets strategies. It would mean extending current financial regulation to those businesses with an interest in crypto.
Following recent discussions with her US counterpart, Reeves said that crypto exchanges, agents and dealers will fall under the scrutiny of the planned regulatory perimeter. The government hopes this will weed out ‘bad actors’ whilst driving greater legitimate innovation. She added that there will be strict rules for crypto firms to adhere to, ensuring full transparency.
At present, approximately 12% of people aged over 18 have at some point dabbled in cryptocurrencies, including bitcoin and ethereum. In 2021, that figure was 4%. The Bank of England has previously urged crypto investors to exercise caution, warning that it is riskier and less secure than traditional ‘mainstream’ currencies.
However, Governor Andrew Bailey is more enthused about the regulation of ‘stablecoins’, another type of digital currency which strives to maintain a fixed value against the dollar. According to draft government proposals, stablecoin issuers will be subject to regulation, provided they are UK-based.
Crypto law specialists have welcomed the new rules, saying they will provide greater clarity, stability and security whilst giving consumers more protection. The government is looking to introduce its finalised crypto bill by the end of 2025.
