UK Crypto Industry Shows Promise Despite Regulatory Growing Pains

The United Kingdom is working to become a global leader in cryptocurrency innovation, but outdated regulatory approaches are creating unnecessary friction for users and businesses.

While progress is being made, industry leaders say the country needs to modernize its consumer protection methods to truly unlock its potential.

Building Innovation While Protecting Users

Kraken’s co-CEO Arjun Sethi recently clarified comments about UK crypto regulations, emphasizing that his company remains committed to expanding in Britain. In a detailed explanation, he noted that Kraken has hundreds of employees in the UK and continues to grow across multiple products and assets.

“The progress with customers, clients and regulators has actually been great,” Sethi explained on social media. His earlier criticism focused on a specific issue: excessive disclaimers that don’t actually protect users but instead train them to ignore warnings altogether.

Source: @arjunsethi

The core problem stems from what Sethi calls “a leftover issue from the Euro era” where platforms require users to navigate through hundreds of disclaimers before completing any action. This approach fails to achieve meaningful consumer protection while creating significant user experience problems.

The Disclaimer Problem Hurts Everyone

The current system requires extensive warnings and multi-step processes that can overwhelm users. The Financial Conduct Authority introduced comprehensive rules in October 2023, including mandatory 24-hour cooling-off periods and complex appropriateness tests.

While these measures aim to protect consumers, they create what industry experts call “warning fatigue.” When users encounter dozens of disclaimers and risk warnings, they often stop reading them carefully. This defeats the purpose of consumer protection and may actually increase risks.

Sethi argues that effective regulation should focus on usability and comprehension, not just legal compliance. “Consumer protection matters. Trust matters. Transparency matters. But usability and comprehension matter too. You can have all of them together,” he emphasized.

The regulations categorize most cryptocurrencies as “Restricted Mass Market Investments,” requiring additional safeguards. However, this broad approach doesn’t distinguish between different types of crypto assets that may pose varying levels of risk.

UK’s Growing Crypto Ecosystem

Despite regulatory challenges, the UK crypto market shows strong fundamentals. According to government data, about 12% of UK adults now own or have owned cryptocurrency, representing significant growth from just 4% in 2021.

The country has attracted major crypto companies and continues to see investment in blockchain technology. Firms like Kraken are expanding their UK operations, viewing the market as strategically important for long-term growth.

Recent regulatory developments show the government recognizing crypto’s potential. In April 2025, officials published draft legislation designed to create a comprehensive framework for digital assets while maintaining consumer protections.

The new rules would bring crypto companies under similar standards as traditional financial firms, covering transparency, operational resilience, and consumer protection. Implementation is expected by late 2026.

International Cooperation Points Forward

The UK government has taken steps to address competitive concerns through international partnerships. The country recently announced a joint task force with the United States called the “Transatlantic Taskforce for Markets of the Future.”

This partnership aims to develop shared digital asset policies that make it easier for companies to operate across both markets. The task force has 180 days to create recommendations and includes officials from both Treasury departments.

The collaboration reflects recognition that crypto regulation works best when major financial centers coordinate their approaches. Rather than competing through restrictive rules, countries can attract innovation by creating clear, workable frameworks.

Industry leaders see this cooperation as essential for the UK’s ambitions to become a global crypto hub. Better coordination could help address banking issues that currently affect about 40% of UK crypto investors, who report payment blocks or delays from traditional banks.

Vision for UK’s Crypto Future

Sethi’s broader vision for UK crypto goes far beyond fixing disclaimer problems. He sees potential for the country to lead in areas like tokenized assets, global liquidity solutions, and inclusive financial products that serve everyday users, not just wealthy investors.

“The goal is to help build a stronger financial ecosystem in the UK. Better yields. More inclusive products. Tokenized assets. Global liquidity. Access for everyone not just family offices,” he explained.

This vision aligns with the government’s stated goal of making Britain a global hub for digital asset technologies. The challenge lies in balancing innovation with appropriate consumer safeguards.

Current enforcement shows mixed results. The FCA has issued over 1,000 warnings to unauthorized firms, but only 54% resulted in content removal. This suggests the regulatory system needs refinement to be truly effective.

Finding the Right Balance

The UK’s crypto regulation story isn’t just about problems—it’s about finding sustainable solutions that protect consumers while enabling innovation. Industry leaders like Sethi emphasize that criticism of specific regulatory approaches doesn’t mean opposition to oversight itself.

Instead, the focus should be on creating regulations that achieve their intended goals efficiently. This means moving beyond checkbox compliance toward meaningful consumer protection that enhances rather than hinders user experience.

The regulatory complexity currently facing the UK crypto sector reflects growing pains common to emerging technologies. As the market matures, both regulators and companies are learning how to balance competing priorities.

A Foundation for Growth

The UK has strong foundations for crypto leadership, including robust financial infrastructure, skilled workforce, and supportive government policies. The question isn’t whether Britain can become a global crypto center, but how quickly it can refine its approach to get there.

Companies like Kraken remain optimistic about the UK market despite current challenges. Their continued investment and expansion suggest confidence that regulatory issues can be resolved through collaboration between industry and government.

The path forward requires nuanced thinking about how regulation can protect consumers while enabling innovation. As Sethi noted, this isn’t about choosing between safety and progress—it’s about achieving both through thoughtful policy design.