UK does not intend to relax cryptocurrency regulations

The UK government has reaffirmed its commitment to maintaining stringent cryptocurrency regulations, despite growing concerns from some industry participants who claim that the regulatory environment is too restrictive. The Financial Conduct Authority (FCA), the UK's financial regulator, has defended its tough stance, insisting that rigorous oversight is essential to protecting consumers and ensuring the integrity of the financial system.
In recent months, the FCA has faced criticism from cryptocurrency advocates, who argue that the UK's regulatory framework could hinder innovation and drive crypto businesses to more lenient jurisdictions. However, the FCA has remained resolute, emphasizing that the risks associated with cryptocurrencies—such as fraud, money laundering, and market volatility—necessitate robust regulation, as reported by Cointelegraph.
The agency’s firm approach reflects the UK’s broader goal of maintaining financial stability while preventing illicit activity within the rapidly growing digital asset market.
The FCA’s regulatory framework requires all crypto firms operating in the UK to register with the agency and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) measures. Val Smith, head of payments and digital assets at the FCA’s authorization division, highlighted that the strict registration process has been instrumental in identifying potential risks and ensuring that only compliant firms operate in the country. As of 2023, the FCA had approved only a fraction of the crypto companies that applied for registration, reflecting its strict approach to market entry.
Despite concerns from some in the industry, the FCA has made it clear that its focus is on long-term stability and consumer protection, rather than competing with countries offering more relaxed regulatory conditions. For example, while jurisdictions such as Switzerland and Singapore have adopted more crypto-friendly policies, the UK has chosen a cautious path. The FCA has pointed to the collapse of several major crypto exchanges and the high volatility of digital assets as evidence of the need for greater regulatory scrutiny.
The FCA has also reaffirmed its commitment to building a strong foundation for the UK cryptocurrency market, one that encourages innovation while ensuring transparency and accountability. Smith emphasized that the FCA’s regulations are designed to build trust in the market, which is critical for the sustainable growth of the sector.
It is worth noting that in March 2024, the FCA revised its ban on crypto exchange-traded products (ETPs), leading to an influx of crypto ETF providers in the country. However, the regulator stated that only professional investors would be allowed to participate in ETF trading.
Also read: Minneapolis Fed President Neel Kashkari criticizes Bitcoin