The UK government is preparing a major shift in how it oversees the cryptocurrency sector, with plans to regulate crypto assets under the same framework as traditional financial products by 2027. The move is designed to bring greater clarity, accountability, and consumer protection to a fast-growing industry that has often operated at the edges of existing financial rules.
According to a report by The Guardian, the Treasury intends to introduce legislation that would place crypto firms under a clear set of standards enforced by the Financial Conduct Authority (FCA). Once in place, the rules would align crypto activities more closely with those governing banks, investment firms, and other regulated financial services.
Eleni Courea
Officials say the aim is not to stifle innovation, but to address long-standing concerns around transparency and risk. Bringing crypto assets into the established regulatory system would make it easier for authorities to identify suspicious transactions, enforce sanctions, and hold companies accountable when rules are broken.
The proposal follows the recent passage of the Property (Digital Assets etc.) Act 2025, which formally recognized digital assets as a form of property under UK law. That legislation laid important legal groundwork, giving courts clearer guidance on how crypto assets should be treated in disputes, insolvencies, and cases of fraud.
Chancellor Rachel Reeves has framed the broader regulatory push as a way to balance innovation with public trust.
“By giving firms clear rules of the road, we are providing the certainty they need to invest, innovate and create high-skilled jobs here in the UK,” she said, while also emphasizing stronger consumer protections and efforts to keep bad actors out of the market.
At present, crypto companies operating in the UK are required to register with the FCA and comply with anti-money laundering and counter-terrorist financing rules. These include know-your-customer checks and the obligation to report suspicious activity. The planned reforms would go further, extending oversight beyond financial crime controls to cover conduct, governance, and consumer safeguards more broadly.
Not everyone in the industry is convinced the approach will help the UK compete globally. Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, has previously argued that the UK’s regulatory stance has been too restrictive. He has suggested that treating most crypto activity as if it were traditional financial instruments risks discouraging innovation and investment, especially when compared with what he views as a more accommodating regulatory environment in the United States.
Critics like Hughes warn that applying the full weight of financial regulation to a still-evolving technology could make the UK a less attractive base for crypto startups and developers. Supporters of tighter rules, however, argue that long-term growth depends on trust, legal certainty, and a well-supervised market.
Alongside its work on broader crypto regulation, the FCA is also increasing its focus on stablecoins pegged to the pound. In a recent letter to Prime Minister Keir Starmer, FCA Chief Executive Nikhil Rathi said the regulator plans to support real-world testing of sterling-backed stablecoin payments in 2026. This would build on a regulatory sandbox launched earlier this year, allowing UK-based firms to experiment under controlled conditions.
The stablecoin initiative signals that regulators are not only focused on risk reduction but also on practical use cases, particularly in payments. If successful, it could pave the way for wider adoption of regulated digital payment instruments within the UK economy.
Taken together, the proposed reforms mark a significant moment for the UK’s crypto landscape. By setting out a clear regulatory path toward 2027, the government is betting that stronger rules can coexist with innovation. Whether the approach strengthens the UK’s position or pushes activity elsewhere will likely depend on how the final framework is implemented and how flexible it proves to be in practice.
