Key Insights
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The UK government has released draft legislation to regulate crypto exchanges, stablecoin issuers, and address market abuse, admissions, and disclosure requirements.
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Chancellor Rachel Reeves emphasized a dual approach of supporting innovation while cracking down on fraud and instability, following continued commitment to prior crypto plans.
LONDON (MarketsXplora) – The United Kingdom government on Tuesday published a series of draft legislative proposals aimed at regulating the cryptocurrency sector, signaling its intent to strike a balance between fostering financial innovation and curbing market abuse and fraud.
The new framework, outlined in consultation papers released by the government, would introduce a series of regulated activities including the operation of cryptoasset trading exchanges, stablecoin issuance, and enforcement of market abuse, disclosure, and admissions regimes.
“This will see the creation of new regulated activities such as operating a cryptoasset trading exchange and stablecoin issuance, as well as market abuse and admissions and disclosures regimes,” the government’s website said.
The proposed rules were developed through ongoing consultation efforts, first launched in 2023 under the Conservative government. Despite a shift in political leadership following Labour’s rise to power last year, the current administration has signaled a commitment to continuing the bulk of its predecessor’s crypto regulatory agenda.
Tulip Siddiq, the former Economic Secretary to the Treasury, had previously stated the government intended to see through most of the plans initiated under the prior administration.
UK Drafts Crypto Regulation Cracks Down on Fraud and Instability
Chancellor of the Exchequer Rachel Reeves reiterated that message with the announcement of the draft legislation, framing the reforms as necessary to “support innovation while cracking down on fraudsters.” In the government’s April 29 notice, Reeves emphasized that while the UK remains open to crypto business, it would not tolerate bad actors.
“Today’s announcement sends a clear signal: Britain is open for business — but closed to fraud, abuse, and instability,” the notice read.
The legislation targets key segments of the crypto market, including exchanges, dealers, and agents. According to the government, many UK residents have been “exposed to risky firms and scams,” prompting a need for stronger consumer protection and regulatory oversight.
The proposals also reflect ongoing international engagement, referencing discussions with U.S. officials and support for a proposed U.S.-UK cross-border sandbox. The idea, championed by U.S. Securities and Exchange Commission Commissioner Hester Peirce, aims to facilitate regulatory cooperation between jurisdictions.
The UK government said it plans to introduce final cryptoasset legislation “at the earliest opportunity” following further industry engagement on the draft measures.