The Treasury is currently drafting rules that will bring the sector under the strict oversight of the Financial Conduct Authority (FCA).

The government aims to overhaul the crypto market to boost transparency, enhance consumer confidence, and facilitate the detection of suspicious activity. Under the new regime, crypto companies – including exchanges and digital wallet providers – must register with the FCA and adhere to established transparency standards.

Chancellor Rachel Reeves described the legislation as a “crucial step” in securing the UK’s status as a world-leading financial centre. She stated that the rules would provide businesses with the certainty needed to invest and create high-skilled jobs, while simultaneously “locking dodgy actors out of the UK market”.

City Minister Lucy Rigby added that the framework is designed to offer clarity and consistency, ensuring the UK remains a top destination for digital asset firms looking to grow. The government is also working in partnership with the United States through a Transatlantic Taskforce to foster innovation and shape global standards.

The move comes amid significant market turbulence and rising concerns regarding consumer safety. Official banking data from October revealed a 55% surge in money lost to investment scams over the last year, with fake cryptocurrency schemes topping the list.

Ministers argue that bringing crypto assets within the regulatory perimeter will make it easier to enforce sanctions and hold firms accountable. Separately, the UK government is drawing up plans to ban political donations made with cryptocurrency due to difficulties in verifying their origin and ownership.