New legislation will bring cryptoassets under existing financial regulation from October 2027, the government has announced. The new law will mean the safeguards applied to other investment products will be expanded to include crypto, rather than legislating a new set of regulations specifically for the crypto industry.
Once it comes into effect, the legislation will require crypto companies to meet the set of standards overseen by the Financial Conduct Authority (FCA) for the first time.
Chancellor Rachel Reeves said: "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, while giving millions strong consumer protections, and locking dodgy actors out of the UK market."
How is crypto regulated in the UK?
As it stands, the FCA only regulates crypto companies for marketing and anti-money laundering, so if something were to go wrong, there would be little recourse for investors. This is in contrast to the regulation of conventional investments and protection under the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS). With these programmes, you can get some or all of your money back if you are scammed or your provider goes bust. This is a particularly important point as the amount of money lost by consumers to investment scams has surged by 55% this year, according to official UK banking industry data. Fake crypto schemes are thought to account for a significant share of the most lucrative scams.
While all UK cryptocurrency firms must be registered with the FCA, investors do not have access to the FSCS or FOS if their digital assets are compromised, meaning there is no reimbursement for any lost or stolen funds.
Eliminating the differences between how more conventional investments are regulated compared to cryptocurrency is a key part of why the new legislation is being introduced now.
How will the additional regulation affect the crypto market?
The government has long sought to increase the regulation on crypto markets to bring them in line with traditional financial products such as stocks and shares. It should provide more protection for consumers and investors in the first instance, but will also serve to shift the wider perspective of the crypto industry by making it more transparent and easier to crack down on. The FCA should be able to impose sanctions and generally hold crypto platforms to account in what is currently a mostly unregulated industry.
Once the new legislation brings crypto under the FCA's purview, it will introduce new rules specifically designed for the sector, expected to target trading and market abuse, custody and issuance. The Bank of England is also expected to move forward with proposals for regulating stablecoins - a type of cryptocurrency usually tied to a fiat currency - with rules finalised by the end of 2026.
While some parts of the crypto industry will flinch at the prospect of greater regulation, the clearer timeline has been welcomed by Daniel Slutzkin, head of UK at crypto exchange Gemini, who said firms now had "long awaited regulatory clarity."
Lucy Rigby, the minister for the City of London, said: "We want the UK to be at the top of the list for cryptoassets firms looking to grow and these new rules will give firms the clarity and consistency they need to plan for the long term."
Can you invest in crypto safely?
Cryptocurrency, and Bitcoin in particular, is becoming an increasingly everyday part of the UK's investment culture. The government seems to be reacting to the growing popularity and has triggered a shift towards greater regulatory oversight and ease of access for investors. It is now possible to purchase crypto ETNs and more crypto exchanges will inevitably come to the market as crypto popularity grows.
It has never been easier to invest in crypto and it will likely only get easier, but there are still issues to be aware of. It is a fundamentally risky investment and you could lose all of the money you put in. Even with this week's announcement, crypto will not be fully regulated in the UK until October 2027.
If you are thinking about investing in crypto, or just want to learn more, we have a range of articles that can help you get to grips with the blockchain and understand whether buying crypto could be a worthwhile option for you.
- 'Bitcoin explained – How does it work and is cryptocurrency safe?'
- 'A beginner's guide to investing in bitcoin and cryptocurrency'
- 'How to buy bitcoin in the UK step-by-step: A guide to buying quickly and safely'
- 'What is a cryptocurrency wallet?'
- 'Can you buy a Bitcoin ETF in the UK?'
- 'How are cryptocurrencies regulated in the UK?'
- '5 best crypto exchanges in the UK for hassle-free trading in 2025'
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