Will the UK Take Action on Crypto?

As the European Union rolls out its MiCA regulations and the United States makes strides with the GENIUS Act in the stablecoin space, the UK’s vague and slow-moving approach has sparked criticism.

In a blog post published on Friday, Lewis McLellan, editor at OMFIF’s Digital Monetary Institute, and John Orchard, the organization’s chairman, argue that the UK has “squandered” its early leadership in distributed ledger technology (DLT). The post, pointedly titled “The UK keeps missing the boat on DLT finance,” calls out the country’s inability to offer clear and timely regulation.

Following Brexit, there were high expectations that the UK would set the “gold standard” for crypto regulation. Instead, the UK continues to speak vaguely about future regulations without providing a clear timeline. This regulatory ambiguity is emphasized in the FCA’s Crypto Roadmap, where no firm date is provided for when its regime will “go live.” At best, the guidance hints at some time after 2026.

EU and US Make Clear Progress on Crypto

The Markets in Crypto-Assets (MiCA) framework is now active across the EU. Meanwhile, the US Senate recently passed the GENIUS Act, a federal law that clearly defines stablecoins as legitimate payment tools.

The UK, however, still categorizes stablecoins as investment assets—a stance that OMFIF analysts say has caused significant market confusion. The Bank of England’s early proposal, which required systemic stablecoins to be backed entirely by central bank reserves, was widely criticized as commercially unworkable. Though this position has since softened, the UK has yet to present a viable regulatory model.

Other Regions Are Moving Ahead

While the UK lags, others are pushing forward. In May, Hong Kong passed its own stablecoin bill and is rapidly building a tokenization infrastructure through its Project Ensemble initiative.

The United Arab Emirates has also been praised for establishing VARA (Virtual Assets Regulatory Authority), a specialized body overseeing digital assets. The UK, by contrast, is still trying to retrofit traditional institutions to manage Web3 and blockchain innovations—an approach that the report sees as insufficient.

The UK’s Early Advantage Is Eroding

OMFIF concludes the piece by noting that although the UK led the way in fintech innovation during the 2010s, and still benefits from its favorable time zone, legal system, and language, those advantages aren’t guaranteed to last.

“Financial hubs rise and fall,” the authors warn. Without bold and timely action, the UK risks falling further behind.

Their message is clear: the UK must establish a clear, fast, and adaptive regulatory framework for the crypto space—before its global influence fades further.

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On April 29, UK Finance Minister Rachel Reeves unveiled new plans that outline a comprehensive regulatory framework for digital assets. According to a statement from the Treasury, under the new rules, crypto exchanges, brokers, and service providers will be supervised similarly to traditional financial institutions in terms of transparency, consumer protection, and operational resilience.

Six New Activities to Fall Under FCA Oversight

With the Financial Services and Markets Act (Cryptoassets Order) set to take effect in 2025, six new types of activity—including crypto trading, custody services, and staking—will be subject to regulation.

Unlike the European Union’s MiCA approach, the UK is adopting a stricter regulatory stance on crypto. This includes capital requirements, governance standards, market abuse rules, and disclosure obligations.

Dante Disparte, Circle’s global policy chief, described the move as a “meaningful step” toward building a rules-based digital asset economy. He emphasized that regulatory clarity offers the predictability needed to grow responsible digital financial infrastructure.

Stablecoins to Be Defined as Securities

Under the new draft, stablecoins will no longer be considered e-money but instead classified as securities. This means fiat-backed tokens issued in the UK must comply with prospectus-like disclosures and redemption procedures. Foreign stablecoins, however, will only be allowed through authorized platforms.

Disparte highlighted the importance of predictability in regulations, stating, “A clear framework without arbitrary enforcement supports responsible growth.”

FCA Approval Required for Foreign Crypto Platforms

Another major shift is the requirement for FCA authorization for foreign firms looking to access the UK retail market. The “overseas persons exemption” will be limited to specific B2B relationships, effectively ring-fencing retail operations.

Staking services will also come under regulatory scope. Liquid and delegated staking models will require FCA registration, while solo stakers and interface-only providers will be exempt.

New custody rules will apply to systems that grant unilateral transfer rights, which may introduce additional burdens for certain DeFi structures.

Zade noted that the broad definition of staking might include decentralized models, and restrictions on credit card purchases—aimed at high-risk use—could discourage retail participation.

Expected to Take Effect in 2026

The final version of the new rules is expected to be announced in 2026. With this, the UK is set to follow a roadmap similar to that of the European Union, aiming to create a clearer regulatory framework for digital assets.

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UK Authorities Freeze $7.7 Million in Crypto from Criminal Proceeds

Police and other authorities in the United Kingdom have frozen approximately £6 million ($7.76 million) worth of cryptocurrency linked to criminal proceeds since 2024. The largest single freeze order was applied to crypto worth £1.5 million ($1.94 million) held in a wallet on Coinbase.

New Powers Allow Crypto Wallets to Be Frozen for Up to Three Years

According to MailOnline‘s investigation, courts have used the powers granted by new regulations introduced last year to freeze these assets. Operations initiated in April 2024 have seen UK police, government officials, and the tax authority (HMRC) launch a comprehensive crackdown on criminal digital assets. In this process, crypto wallets deemed suspicious have been frozen by court orders.

Legal documents reveal that suspected crypto wallets can be frozen for up to three years. On March 18, HMRC obtained the largest freeze order to date at Newcastle Upon Tyne Magistrates’ Court.

UK Tightens Measures Against Crypto Crimes

The UK government is allocating more resources to combat crypto crimes, adopting a more aggressive approach to money laundering. Legal expert Siobhain Egan notes that authorities are expected to issue more crypto freeze orders in the future.

Last week, the government unveiled the Crime and Policing Bill. This new legislation aims to facilitate the rapid seizure of illicit crypto assets. Additionally, in December 2024, the UK Financial Conduct Authority (FCA) proposed stricter regulations to reduce risks in the sector.

Crypto law expert Nick Barnard stated that while the amount frozen so far is small on a global scale, the UK is expected to accelerate its crypto regulation efforts. HMRC and the National Crime Agency (NCA) are focusing on digital assets linked to tax evasion and organized crime.

Authorities emphasize that stricter measures against crypto crimes are expected, with large-scale operations likely to increase.

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UK NCA Officer Charged with Bitcoin Theft

An agency responsible for criminal investigations in England and Wales has announced that a National Crime Agency (NCA) officer will face charges for allegedly stealing approximately $75,000 worth of Bitcoin in 2017.

In a statement released on March 14, the Crown Prosecution Service authorized Merseyside Police to file 15 charges against NCA officer Paul Chowles in connection with the Bitcoin theft during an investigation into online organized crime. Authorities indicated that Chowles could face charges of theft, handling stolen goods, concealing, converting, or transferring criminal property, and possession or use of criminal property.

50 Bitcoin, valued at about $75,000 before the December 2017 bull market, is now worth over $4.2 million at the current price of $84,541 per Bitcoin. The NCA officer is expected to appear in Liverpool Court on April 25.

UK Introduces New Regulations to Combat Cryptocurrency-related Criminal Activity

In April 2024, changes to the UK’s Economic Crime and Corporate Transparency Act allowed NCA officers and local police to seize cryptocurrencies from individuals suspected of criminal activity without making an arrest. The Crown Prosecution Service has not disclosed how Chowles allegedly stole the Bitcoin or whether the funds were linked to any illegal activities.

The UK NCA, as part of a global anti-money laundering and organized crime campaign, announced in December 2024 that they had seized nearly $26 million worth of cash and cryptocurrencies, resulting in the arrest of 84 individuals. During this time, it was noted that certain crypto addresses targeted by the UK were frequently exposed to Garantex, a Russian crypto exchange. The founder of Garantex was arrested in India in March and is expected to be extradited to the United States to face charges.

The UK government is expected to begin developing a comprehensive regulatory framework for digital assets following a 2025 victory by the Labour Party. The country remains a significant market for crypto users, particularly after Coinbase received approval from financial regulators.

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In response to US President Donald Trump’s “strong policy momentum” on crypto, venture capital firm Andreessen Horowitz will pull back its operations in the UK.

In a Jan. 24 X post, Anthony Albanese, COO of Andreessen Horowitz’s crypto division, acknowledged the “enthusiasm for crypto building and adoption” in the UK but confirmed plans to shut the office. According to Albanese, the firm intends to focus on the US market, following actions taken by Trump in his first week in office.

“This doesn’t change our confidence in the UK’s growing role in crypto and blockchain,” said Albanese. “We will continue to invest in great entrepreneurs wherever they are, including the UK. We are also ready to support the UK’s crypto efforts.”

Related tweet:

The venture capital firm had opened a crypto office in London in 2023, citing the country’s “predictable business environment” at the time. Back then, former Conservative Party leader Rishi Sunak was the Prime Minister, but power shifted to the Labour Party following the July 2024 elections.

The UK government under Prime Minister Keir Starmer has announced plans to introduce a comprehensive crypto regulatory framework by 2026. In January, the Prime Minister also revealed that the government plans to adopt a 50-point AI action plan to support economic growth.

US versus UK Crypto Policy

Since taking office on January 20, Trump has signed an executive order aimed at exploring regulations on stablecoins and a strategic crypto reserve. The US Securities and Exchange Commission (SEC), now operating with only three commissioners after former Chairman Gary Gensler’s departure, has stated it will form a crypto task force to develop a market framework.

Marc Andreessen, co-founder of the venture capital firm, contributed more than $5 million to US political action committees (PACs) for Trump’s 2024 presidential race and donated $22 million to the Fairshake PAC to elect “pro-crypto” congressional candidates.

He had previously described himself as an “unpaid intern” for Tesla CEO Elon Musk’s government efficiency committee under Trump, which is facing lawsuits after the January 20 inauguration.

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With this approval, GSR becomes the first crypto liquidity provider to achieve dual regulatory authorization from both the FCA and the Monetary Authority of Singapore (MAS).

New Services and Rising Demand

The FCA approval will enable GSR to provide services such as over-the-counter (OTC) and programmatic execution trading for clients in the UK.

• This development is particularly significant as demand for regulated crypto trading solutions has risen sharply since Bitcoin surpassed the $100,000 milestone in December 2024.
• Institutional investors entering the market throughout the year have further fueled this demand.

Dual Regulatory Authorization

GSR’s Group CEO, Xin Song, highlighted that dual authorization allows the firm to “confidently expand [its] services to institutional and professional clients globally.”

This dual compliance demonstrates GSR Markets UK’s adherence to the regulatory standards of major global markets in both the UK and Singapore.

Service Expansion

With FCA’s green light, the company is well-positioned to address the growing demand for regulated and reliable trading platforms as industry players increasingly prioritize compliant solutions in crypto markets.

You Might Be Interested In: Elon Musk Shared, That Memecoin Flew: Up 500%!

GSR Markets UK CEO Jakob Palmstierna noted that this milestone will enable the company to better support its clients “as they navigate the dynamic, rapidly growing market.”

The firm’s global operations include over 120 employees in the UK, making it one of the largest crypto-native employers in the region.

MPI License in Singapore

On April 4, 2024, GSR Markets secured its Major Payment Institution (MPI) license from MAS. This license allows the firm to offer multiple payment services and exceed the volume limitations imposed on payment firms.

• With the MPI license, GSR can surpass the SG$3 million ($2.2 million) volume limit for a single payment service and the SG$6 million ($4.4 million) monthly limit for two or more services.

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Risks Between the Crypto Sector and Banking Systems

The cryptocurrency industry faced the threat of being excluded from traditional banking systems under Operation Chokepoint 2.0. Jason Lau, Chief Innovation Officer at the crypto exchange and self-custody wallet provider OKX, emphasized that building strong relationships with banks and financial stakeholders serves as a strategic safeguard against debanking threats.

Lau highlighted that the traditional financial world is heavily based on trust and that building relationships with banking institutions, financial regulators, and other stakeholders is essential to maintaining strong partnerships. In an interview with Cointelegraph, Lau stated:
“You need to take the time to build relationships with all your stakeholders, including regulators and your banking partners. We’ve spent years and years working with our partners and stakeholders to make sure they understand our business.”

The Global Problem of Debanking

Many Operation Chokepoint 2.0 debanking cases originated in the United States and involved US-based entities. However, debanking continues to be a global issue with implications for business, technological innovation, and freedom of speech.

For instance, Ben Rose, the former regional manager of Binance Australia, claimed that the exchange was given only 12 hours’ notice before being debanked. The debanking, which occurred in the middle of the night, reportedly came without a clear explanation.

Debanking Cases in the United Kingdom

In July 2023, leaked documents revealed that UK politician Nigel Farage was debanked due to his political views. This led the UK government to propose revoking banks’ licenses if they violate freedom of speech.

The UK government laid out the following consumer protection provisions for banks:

• A three-month notice to customers before account closures,
• An explicit reason for account closure,
• An opportunity to appeal the closure.

In 2023, crypto companies in the UK also reported being turned away by banks. Common issues included excessive paperwork, frozen accounts, and rejected applications without sufficient explanation.

As of 2024, crypto firms and projects continue to face similar challenges.

Debanking gained widespread recognition in online platforms and digital culture, earning a spot on the 2023 Collins Dictionary’s Word of the Year shortlist.

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The FCA warned citizens about Pump.fun and emphasized that users of the platform would not be able to benefit from consumer protection mechanisms. The authority advised avoiding business dealings with the platform and urged extreme caution against potential fraud.

Following the ban, users in the Pump.fun Telegram support channel noted that the platform is no longer available in the United Kingdom. Some users indicated they would attempt to access the platform using VPNs.

The UK is currently developing a comprehensive regulatory framework for digital assets. New regulations covering stablecoins, staking, and other crypto activities are expected in the near future.

What is Pump.fun?
Operating on the Solana blockchain, Pump.fun is a decentralized platform that allows users to create tokens without requiring technical expertise. Launched in January 2024, the platform gained attention with its simple and low-cost token creation process.

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The U.S. branch of Canada-based TD Bank agreed to pay over $3 billion in fines following accusations related to money laundering, and its expansion plans in the U.S. have been restricted. This agreement, dated October 10, was made due to the bank’s failure to monitor money laundering activities by criminal organizations.

According to FinCEN’s report, more than $1 billion of TD Bank’s transfer volume was linked to two cryptocurrency companies operating in the United Kingdom and Colombia. A customer group, referred to as “Customer Group C,” allegedly operating in the finance and real estate sectors, conducted the majority of these transfers.

Over 90% of the transactions by this customer group were conducted through funds originating from a crypto exchange based in the United Kingdom. Additionally, over 60% of these transactions were transferred to a financial institution in Colombia that provides virtual asset-related services.

FinCEN noted that this customer group processed over $100 million in monthly transfers, with most of the transactions facilitating crypto trading in high-risk regions such as Colombia, China, and the Middle East.

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The U.S. wing of Canada-based TD Bank has agreed to pay more than $3 billion in fines following money laundering charges and restrictions on its U.S. expansion plans. The Oct. 10 settlement was made because the bank failed to track criminal organizations’ money laundering activities.

According to FinCEN’s report, more than $1 billion in TD Bank’s transfer volume was linked to two cryptocurrency firms operating in the U.K. and Colombia. A group of customers, known as “Customer Group C,” allegedly involved in the finance and real estate sectors, made the bulk of these transfers.

More than 90% of this group’s transactions were made through funds from a crypto exchange operating in the U.K. Additionally, more than 60% of these transactions were remitted to a financial institution in Colombia that provides virtual asset-related services.

FinCEN noted that this group of clients remitted over $100 million per month, with most transactions facilitating crypto trading in high-risk regions such as Colombia, China, and the Middle East.

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