UK to Unveil Comprehensive Crypto Regulation Framework by Early 2025

The UK government is set to deliver a comprehensive regulatory framework for crypto assets, including stablecoins and staking services, by early 2025. This announcement was made by a Treasury official at City & Financial Global’s Tokenisation Summit in London on November 21.

While crypto regulations were initially expected last summer, the political changes following the general election, which resulted in the Conservative government’s ousting and the rise of the Labour government led by Keir Starmer on July 5, 2024, delayed those plans. Now, the Labour government is preparing to introduce the much-awaited regulations.

A Unified Approach to Crypto Regulation

Tulip Siddiq, Economic Secretary to the Treasury, explained that the upcoming regulations would cover a broad range of crypto assets, including cryptocurrencies, stablecoins, and staking services. She noted that handling all the regulatory measures in a single phase made more sense than breaking them up.

Regarding stablecoins, Siddiq pointed out that their use cases do not align well with existing payment services regulations. Stablecoin regulation has been in development since the publication of discussion papers in October 2023, but it was always expected that legislation would not be finalized before 2025.

The UK’s crypto industry also hopes that staking services will not be classified as “collective investment schemes,” which would impose stricter rules. Siddiq reassured the summit that the government intends to clarify this legal uncertainty, acknowledging that the current classification does not seem appropriate for staking services.

Despite the former Conservative government’s ambitions to make the UK a global cryptocurrency hub, the country has often been viewed as having a challenging regulatory environment. This perception is partly due to the Financial Conduct Authority (FCA), an independent regulator that has been slow to provide clear guidance on crypto regulations.

In contrast, the European Union is poised to implement its Markets in Crypto-Assets (MiCA) regulation by the end of this year, offering much-needed regulatory clarity. Meanwhile, the United States has shifted its approach to crypto regulation under the leadership of the Trump administration, which is seen as more crypto-friendly. As a result, the UK risks losing its attractiveness to the rapidly growing crypto industry.

While the Labour government has yet to introduce significant new crypto regulations, they did propose a bill in September to clarify the legal status of non-fungible tokens (NFTs), cryptocurrencies, and carbon credits, declaring them as property. This marks the first step in the Labour government's regulatory agenda for the crypto sector.

With regulatory clarity on the horizon, the UK is hoping to regain its standing in the global crypto market, but the industry will be closely watching the details of the forthcoming regulations to ensure they strike the right balance between innovation and consumer protection.