Firms offering services for cryptoassets like Bitcoin and Ethereum will be subject to new rules.
The Government has said that the new rules have been introduced to boost investor confidence and drive growth through the Plan for Change.
At a major summit in London to mark UK FinTech Week, Chancellor of the Exchequer, Rachel Reeves, revealed that the UK has published draft legislation for regulating cryptoassets.
Around 12% of UK adults now own or have owned crypto, up from just 4% in 2021, but consumers have been left exposed to risky firms and scams at times.
Under the new rules, crypto exchanges, dealers and agents will be brought into the regulatory perimeter – cracking down on bad actors and attempting to support legitimate innovation.
Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection and operational resilience.
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“Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers,” said Reeves.
“Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.”
A spokesperson for CryptoUK, the trade association for the digital assets industry, added: “Rachel Reeves’ commitment to provide new and clearer rules for the digital assets industry is very much welcomed and a big victory for our members, who have been working tirelessly over the last seven years to place the UK at the forefront of the crypto industry.
“Though there has been good regulatory progress from the FCA, which published its crypto roadmap late last year, the UK government first committed to becoming a global crypto hub in 2022. Progress has been slow since then, but as the Chancellor has recognised herself the mainstreaming of the industry has continued, with now 12% of all UK adults owning some sort of crypto, up from 4% in 2021.
“The digital assets industry can’t be ignored, will help boost the country’s economy and provide highly-skilled jobs. We look forward to engaging with all key stakeholders as we have done on every past piece of new legislation, to ensure that the technical details make sense.
“Specifically, we want clarity around the activity of liquid staking and how to define defi, an incredibly important sub-sector the digital assets industry.”
The Government will bring forward final cryptoasset legislation at the earliest opportunity, following engagement on the draft provisions with industry.