4th May 2025 > > The UK.

tl;dr

The last week has seen potentially momentous news emanating from the UK political landscape, which will shape the future of cryptos in the UK.

Market Snap

Market Wrap

Sadly, the leveraged shorts have cut their position willingly rather than by forced liquidations, so we must wait for the next short squeeze higher.

Curious Cryptos’ Commentary – The UK

The UK’s government has long been antagonistic towards cryptos.

Rishi Free Money Sunak, whilst at the treasury, surprised even seasoned political observers with the extent of his outright lies about his positive intentions towards the industry. He was keen that the UK government developed the ultimate tool of financial oppression, CBDCs.

With the change of administration last year, Tulip Siddiq, laughably appointed as anti-corruption minister with responsibility for ensuring financial propriety in public life but now heading to the slammer for allegedly being involved in the financial defenestration of the Bangladeshi people, had been responsible for ensuring that cryptos continued to receive short shrift from the UK authorities.

Siddiq’s successor, Emma Reynolds, made a very promising start with an early approval of Coinbase as a registered virtual asset provider by the FCA. Disappointingly, there has been little action of substance since then, despite the vocal and public support she has received from the CCC.

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On 29th April, whilst taking time out from editing her CV, UK Chancellor of the Exchequer Rachel from complaints Reeves addressed the topic of cryptos, for the very first time I believe:

https://www.gov.uk/government/speeches/chancellor-speech-at-global-innovate-summit-2025

In a speech dominated by developments in the regulation of TradFi (i.e. making it ever more onerous, increasing the cost of capital, reducing productivity, embedding the hegemony of the large banks, and making us all poorer), Reeves surprised the room with this:

“When I met with senior leaders from across the FinTech sector last month… you told me about the importance of getting the balance of regulation right … especially on digital assets. I agree.”

I know, I had to read that several times over too.

To give Reeves a break, let’s make the heroic assumption that she isn’t just channelling her inner Sunak here, and that she is being honest with us:

“I’m delighted that we are today publishing draft legislation for the UK’s comprehensive regulatory regime for cryptoassets, engaging with all of you to ensure that the final legislation – planned for later this year – delivers for government and most importantly for the industry, and makes the UK a great place for digital asset companies to invest and innovate.”

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You can read the draft legislation here:

https://assets.publishing.service.gov.uk/media/680f6387faff81833fcae94b/0302425_draft_RAO_SI.pdf

At 27 pages long, this is a very wide-ranging paper that addresses some of the key issues in the regulation of cryptos including:

i) Custody of crypto assets.

ii) Definition of which crypto assets are regulated or not.

iii) Definition of regulated “cryptoasset trading platforms”.

And a whole section on stablecoins, probably the most pressing issue for the future health of the crypto industry.

Here is hard evidence of concrete and positive development within the UK for the crypto industry, not just more weaselly political words that we got from the Conservatives whilst in power. The churlish may claim that Reeves’ hands have been forced by MiCA in the EU, and the Trump pivot into cryptos, but whatever. Once Reeves starts to see the crypto tax dollars accumulating for her to spend on reducing the workload of train drivers whilst handing over inflation busting pay rises, she will become a crypto convert once and for all.

Curious Cryptos’ Commentary – The FCA

The UK regulator, the Financial Conduct Authority, is already on the case, with the choreographed publication almost immediately after Reeves’ ground breaking speech of its own discussion paper “Regulating Cryptoasset Activities”:

https://www.fca.org.uk/publication/discussion/dp25-1.pdf

At 83 pages long, my Sunday morning has not been as exciting as I had hoped for but, as ever, the CCC team reads this stuff so that you do not have to.

“Cryptoasset trading platforms” (think Coinbase) and intermediaries (think Revolut) come in for some useful scrutiny, though we do already have regulation in place for these two types of operators. Order management and transparency are high on the list of the regulator’s priorities, as it is with TradFi. The principles and practice are already well-known and battle-tested, so there is little value added here.

The section on cryptoasset lending and borrowing contains a very interesting proposition buried in the detail:

“We are therefore proposing to restrict firms from offering these products to retail consumers in their current structure.”

This looks like a regulatory drive to remove leverage trading from retail investors. There are many that will be horrified by this idea. The CCC gives it full-throated support, for far too many individuals lose money to the sharks, and the better-informed. There are issues around DeFi of course, but stopping the centralised leverage platforms from operating within the UK is an honourable aim. To a certain extent that is the current policy, but a formalisation with the support of the legitimate crypto industry will be a big step forward.

The paper also proposes that retail investors are prevented from using credit to buy cryptos:

“So, we are exploring whether it would be appropriate to restrict firms from accepting credit as a means for consumers to buy cryptoassets. We are considering a range of restrictions, including restricting the use of credit cards to directly buy cryptoassets, and using a credit line provided by an e-money firm to do so.”

Once again, a very wise suggestion.

Sections on staking and DeFi are less well-defined, reflecting the regulator’s lack of understanding of these activities. Under DeFi, the ambition is to “… achieve the same regulatory outcomes for the same activity”, which is superficially attractive but probably impossible to achieve practically. Driving DeFi protocols into unregulated jurisdictions would be the same mistake the FCA has made in driving much of the private credit business out of the regulated sphere, raising not lowering the risks to financial stability.

The conclusion is positive:

“Our aim is to achieve an appropriate degree of consumer protection, enhance market integrity, support effective competition whilst facilitating international competitiveness and encouraging growth as far as reasonably possible. We welcome feedback as to whether the policy proposals achieve an appropriate level.”

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The crypto revolution is about to get a kick-start in the UK. If this happens on her watch, Reeves may become one of the greatest Chancellors the UK has ever had, and good for her.