The UK financial watchdog says traditional financial rules would hardly be effective for the digital assets sector. That is why the British government plans to introduce a full regulatory framework for the UK crypto asset market. It also aims for deeper cooperation on digital assets with the United States.

FCA adapting rules to crypto sector

Until the framework is introduced, the UK Financial Conduct Authority (FCA) may exempt some cryptocurrency firms from existing rules. Traditional finance regulations would not work effectively for crypto, according to David Geale, FCA’s executive director for payments and digital finance.

The regulator proposes adapting rules to the unique nature and risks of crypto assets. “We start from the principle that if it is the same risk, you go for the same regulatory outcome,” Geale told the Financial Times. He stressed that changes would not mean lowering standards, but that the underlying technology requires different rules. [1]

UK’s current crypto regulation

The UK already has partial rules for the crypto sector. Since 2019, UK-based crypto firms have had to register with the FCA to comply with anti-money laundering (AML), counterterrorism finance, and know-your-customer (KYC) obligations.

Last year, Prime Minister Keir Starmer’s government announced plans to introduce a comprehensive framework. The move also reflects pressure from the United States, which introduced new stablecoin regulations in July.

Closer transatlantic cooperation

Both countries are now preparing to announce deeper cooperation on digital assets, according to the Financial Times. [2] Earlier this week, UK Chancellor of the Exchequer Rachel Reeves met with US Treasury Secretary Scott Bessent to discuss closer alignment of rules. The meeting included crypto firms such as Coinbase, Circle, and Ripple, as well as banks including Citi, Bank of America, and Barclays.

British officials said Reeves hoped a closer alignment of rules would increase British companies’ access to the world’s deepest and most liquid financial markets, as well as attract greater US investment into the UK.

The push follows a period of intense political anxiety over an exodus of London-listed companies to the New York Stock Exchange and Nasdaq, as businesses seek higher valuations on the other side of the Atlantic.

The US Treasury declined to comment. On X, Reeves wrote she welcomed Bessent to Downing Street, saying: “Together we are delivering investment and opportunity for both our countries.” [3]

Sources:

[1] https://www.ft.com/content/32e622ba-9d02-4ba5-bab0-e82facd4f849

[2] https://www.ft.com/content/3b814ced-16f5-45f4-815d-cbfb8d2c63a6

[3] https://x.com/RachelReevesMP/status/1967912992663867753