No License, No Cryptocurrency: UK’s New Legislation Renders BTC, Locking tokens, and Exchanges Prohibited Instantly
In a significant development, the UK government released a draft of crypto asset legislation that would formally incorporate crypto into the conventional financial framework. Not everyone will be rejoicing.
The updated Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 establishes a robust regulatory structure, officially categorizing crypto trading platforms, stablecoin issuers, custodians, and locking tokens providers as regulated financial activities.
Entities engaged in these activities will now necessitate full authorization from the Financial Conduct Authority (FCA) — or risk operating unlawfully.
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At the core of the new crypto law lies authority and governance. The government is positioning London as a formidable contender on the global crypto scene – likely as a response to changes in US policy, but this move raises significant alarms regarding surveillance, financial hurdles, and inhibiting innovation.
Central to the proposed legislation are several new provisions. Here’s what’s important in the Draft:
- Crypto Exchanges must obtain licenses akin to those for stock exchanges.
- Stablecoin Issuers will be regarded similarly to banks and money market funds.
- Custodians will contend with stringent safeguarding regulations (particularly regarding user wallets and private keys).
- Earning yield Providers (even those utilizing decentralized models) must register under a new specialized framework.
Importantly, the legislation also broadens the UK’s jurisdiction beyond its borders. If a foreign crypto platform even indirectly provides services to a British consumer, they can now be subject to UK law.
This “considered in the UK” provision could drastically alter the operations of international crypto enterprises — or compel many to exclude British users, paralleling what has occurred in the U.S.
Additionally, the definition of “crypto asset” is astonishingly inclusive, encompassing nearly all digital tokens except for loyalty points, gaming assets, or non-transferable NFTs. Everything else, ranging from BTC to DeFi tokens, is included under this framework.
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New UK Crypto Bill Provokes Debate
The UK has just proposed new crypto regulations.
“If the FCA determines […] a person has acted […] contrary to enhancing its objectives […] the FCA may publish a statement to that effect.”
The FCA has now granted itself the authority to publicly embarrass you WITHOUT A TRIAL if it deems… pic.twitter.com/aA8OG1JOxV
— Crypto Tips (@cryptotipsreal) April 29, 2025
The suggested new legislation includes various contentious provisions, which are already eliciting dissatisfaction from crypto organizations.
- Staking Sweep: Even minor staking activities could result in full crypto law, potentially hindering DeFi in the UK.
- Stablecoin Collateral: Any fiat-backed crypto token must comply with rigorous “backing asset” disclosure requirements, which may pose a complicated challenge for algorithmic and hybrid systems.
- Innovation Stagnation Alert: Smaller cryptocurrency startups may exit the UK crypto market instead of traversing an overwhelming regulation landscape.
Despite a change in political leadership with Labour succeeding the Conservatives, the new administration has pledged to continue the preceding regime’s “crypto asset regime” initiatives almost completely, without any new stance or reevaluation.
Why It Matters: This isn’t merely another tedious regulatory announcement – it marks the beginning of the UK’s ambition to lead in “Regulated Crypto” on a global scale. However, by confining the industry to outdated financial norms, Britain might inadvertently suffocate the Web3 revolution it aims to price floor.
Overall, the UK’s crypto asset crackdown presents a dual challenge, offering legitimacy on one side while imposing a regulatory stranglehold on the other. Crypto firms globally are now alerted: adapt, comply, or exit the UK.
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The article No License, No Crypto: UK’s New Law Makes Bitcoin, Staking, and Exchanges Illegal Overnight first appeared on 99Bitcoins.
