Crypto firms operating in the United Kingdom may soon get the clarity they have long awaited. The UK government has released draft rules that would regulate crypto activities under the Financial Services and Markets Act 2000. These proposed regulations seek to align crypto oversight with traditional financial markets, moving away from the light-touch policies seen elsewhere. Experts say the UK is now positioning itself as a secure, rule-based environment for digital assets.

UK Introduces Draft Crypto Rules Under Financial Services and Markets Act

The UK Treasury released a statement following remarks by Chancellor Rachel Reeves, confirming new draft rules for the crypto sector. The proposal aims to regulate crypto exchanges, agents, and service providers under the same framework used for traditional financial firms.

The draft, titled the Financial Services and Markets Act 2000 (Cryptoassets) Order 2025, outlines six regulated activities. These include crypto trading, custody, staking, and other asset-related services. According to law firm Wiggin, the UK will apply full securities regulation to crypto instead of adopting a more lenient model like the EU’s MiCA framework.

The rules introduce requirements for governance, market abuse, capital, and disclosures. Market participants will be required to meet strict compliance and transparency standards.

Experts View the UK as a Potential Crypto Safe Harbor

Dante Disparte, Chief Strategy Officer at Circle, said the UK’s proposed rules show a clear shift toward a rules-based approach. Disparte stated, “The UK’s draft crypto regulations represent a meaningful step toward embracing a rules-based digital asset economy.”

He added that this framework could help scale responsible digital financial infrastructure across the country. By offering regulatory certainty, Disparte believes the UK is creating the conditions for innovation without arbitrary enforcement.

It's been a fantastic #UKFintechWeek so far, capped off by very welcome news of draft crypto legislation from the UK Chancellor the Rt Hon @RachelReevesMP . This is a clear signal of intent from the Government to position the UK as a global leader for digital assets.

At @Ripple…

— Cassie Craddock (@CraddockCJ) April 30, 2025

Bitget COO Vugar Usi Zade also welcomed the proposals. Zade said many firms had delayed entering the UK market due to unclear crypto classifications. Now, companies know which activities, such as custody and staking, require Financial Conduct Authority (FCA) approval.

FCA Approval Needed for Domestic and Foreign Crypto Firms

The draft law also affects foreign platforms serving UK clients. Any non-UK crypto firm that wants to offer services to UK retail users must get FCA authorization. The current overseas person’s exemption will no longer apply to most retail activities.

Exchanges will need to realign systems to comply with capital requirements and reporting rules. Companies will have two years to implement the changes, allowing for gradual compliance.

Staking services are now within the regulatory perimeter. While solo and non-custodial models are exempt, delegated and liquid staking providers must register. The scope could also cover multiparty custody and certain lending arrangements.

Stablecoins Treated as Securities, Not E-Money

The draft reclassifies fiat-backed stablecoins as securities rather than electronic money. This will require UK-issued stablecoins to meet prospectus-style disclosure and redemption standards. Non-UK stablecoins can still be traded, but only through authorized venues.

Disparte, whose company Circle issues the USDC stablecoin, stressed the need for predictability. He said, “What matters most is predictability: a framework that enables firms to build, test, and grow responsibly.”

Zade added that excluding stablecoins from the Electronic Money Regulations 2011 could slow their use for payments. Still, he said the overall approach gives businesses enough clarity to plan future rollouts.

Road Ahead and Remaining Challenges for DeFi

The FCA is expected to publish final rules in 2026. These will mark the start of a fully regulated UK crypto framework, building on the draft measures set out now. The roadmap is seen as a UK-specific path, separate from the EU’s MiCA framework.

Experts said some decentralized finance (DeFi) definitions still need refinement. For instance, the draft’s wide staking definition could include non-custodial DeFi platforms with no central operator. The FCA may rework these portions in an attempt to prevent over-regulating open source networks.

Bank-grade segregation rules could also hamper lean projects, Zade added. Other final rule changes will be required to find a balance between safety and innovation.

The UK’s draft rules hope to create the clarity, oversight, and legal underpinning needed for crypto firms to operate with confidence.  The impact of the framework in making the UK more attractive as a global crypto hub will be implementation-based and industry response-based.