UK Government Publishes Crypto Regulation Draft Targeting Bitcoin and Digital Asset Firms

• UK unveils draft law placing crypto firms under full financial regulation standards.
• Talks with U.S. explore cross-border crypto regulations and a potential sandbox model.
• FCA roadmap and new legislation aim for complete crypto oversight by 2026.

The UK government has released a long-anticipated draft legislation that seeks to bring crypto service providers under full financial regulation. The proposal was unveiled on April 29 during a summit in London, part of the broader UK Fintech Week. Chancellor Rachel Reeves announced the measure as a major step in aligning the digital asset sector with established financial standards, while addressing risks linked to unregulated activities.

The draft introduces mandatory requirements for exchanges, custodians, and other crypto-facing institutions to enhance transparency, operational resilience, and investor safeguards. The legislation is positioned as part of the UK’s “Plan for Change,” an economic strategy that promotes innovation with clear regulatory boundaries.

Draft Proposes Equal Treatment for Crypto and Traditional Finance

As per the proposed legal requirements, the UK-based chains dealing with UK customers shall be regulated like other financial sectors. This involves governance, risk, compliance, consumer protection, and anti-fraud measures. According to these standards, the government seeks to plug loopholes that have allowed risky or unlawful operations in the digital asset area.

The initiative is a response to the increasing number of exposures to crypto in the country. Around 12% of the UK adults own cryptocurrencies like Bitcoin and Ethereum , so there a growing demand for increased regulation. According to the drafted bill, all crypto service providers must implement sufficient measures to protect the users’ funds and provide clarity.

UK and US in Talks for Cross-Border Crypto Framework

Alongside the domestic proposal, the UK has opened international discussions with the United States. Reeves confirmed meetings with U.S. Treasury Secretary Scott Bessent in Washington, focused on building aligned standards for digital asset governance.

The talks have considered the possibility of a transatlantic sandbox model for digital securities. SEC Commissioner Hester Peirce had earlier floated the idea of regulatory cooperation for cross-border crypto innovation, which now appears under exploration. UK officials have also framed this coordination as a response to rapid advancements in U.S. crypto legislation and the need for synchronized oversight.

Reeves emphasized that the UK will remain open to technological development but enforce strict rules against fraud and noncompliance. She announced that the government will present its Financial Services Growth and Competitiveness Strategy on July 15, a broader economic outline that includes the fintech and blockchain sectors.

Legislation Builds on Existing FCA Roadmap

The draft law is the latest in a series of regulatory efforts to define the UK’s approach to digital assets. The Financial Conduct Authority (FCA) has already been working on a phased regulatory model, with plans for full implementation by 2026.

Last year, the government initiated the move toward a unified regulatory framework. Talks started in late 2024 after a proposal to incorporate NFTs and cryptocurrencies as properties under UK law. That proposal was supposed to offer the necessary legal guidelines and facilitate the use of courts to recover stolen digital currencies.

This is done through the upcoming legislative draft, which maintains these goals and can be described as a shift towards the creation of legal requirements in the UK’s crypto sphere. It comes at the same time as legislation on crypto banking and the use of stablecoins is underway in the United States.