The post Crypto Regulations in the United Kingdom 2025 appeared first on Coinpedia Fintech News
The United Kingdom is moving toward stronger cryptocurrency regulations. The government is working on new rules to avoid penalties and ensure safe use of digital assets. These rules aim to support new technology while protecting users and keeping markets stable.
Crypto is becoming more popular in the UK, and the UK crypto market is expected to reach $1.6 billion in revenue. This leads to an important question: What changes in UK crypto regulations are driving this growth?
Table of contents
Key Regulatory Developments in 2025
May 28, 2025 – FCA Proposals on Stablecoins and Custody
May 7, 2025 – Bank of England on Stablecoins
May 2, 2025 – FCA Discussion Paper (DP25/1)
April 29, 2025 – HM Treasury Draft Statutory Instrument
March 18, 2025 – Digital Security Sandbox (DSS) Restrictions
February 4, 2025 – House of Lords Property Bill
January 30, 2025 – DSS Amendment
January 9, 2025 – Financial Services and Markets Act 2000 Amendment
Who Regulates Cryptocurrency in the UK?
Crypto Taxation in the UK (2025)
Investors & Traders
Crypto Companies
Crypto Licensing Rules for UK Companies
Crypto Adoption Rate in the UK (2025)
UK Government’s Stance on Cryptocurrency
Final Thoughts
FAQs
Key Regulatory Developments in 2025
May 28, 2025 – FCA Proposals on Stablecoins and Custody
The Financial Conduct Authority (FCA) published proposals to regulate:
Stablecoin issuance
Crypto custody services
Financial resilience of crypto firms
These proposals aim to ensure stablecoins maintain their value and provide transparency around asset backing. The FCA is also considering incorporating stablecoin regulation into its innovation services and plans to coordinate closely with the Bank of England.
Feedback deadline: July 31, 2025
Final rules expected: 2026
May 7, 2025 – Bank of England on Stablecoins
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, emphasized the importance of stablecoins in modern payment systems. She confirmed the review of a viable model for integrating stablecoins into the UK’s payment rails. The related bill passed its third reading in Parliament on May 8 without changes.
May 2, 2025 – FCA Discussion Paper (DP25/1)
The FCA released a discussion paper exploring regulation around:
Cryptoasset activities
Trading platforms
Staking services
The paper seeks industry feedback for future regulatory developments.
April 29, 2025 – HM Treasury Draft Statutory Instrument
HM Treasury published a draft statutory instrument outlining:
Rules for issuing stablecoins
Custody of digital assets
Guidelines for crypto trading platforms and transactions
March 18, 2025 – Digital Security Sandbox (DSS) Restrictions
The Treasury and Debt Management Office (DMO) confirmed that unbacked cryptocurrencies and stablecoins are excluded from the DSS program unless expressly approved by the Bank of England and FCA.
February 4, 2025 – House of Lords Property Bill
The House of Lords Committee Stage of the Property Bill clarified legal treatment of:
Crypto tokens
Collateral arrangements
This update strengthens the legal framework surrounding digital assets.
January 30, 2025 – DSS Amendment
The UK government updated the DSS regulations following the Financial Services and Markets Act 2023. Key changes:
Imposed anti-money laundering (AML) and counter-terrorist financing (CTF) rules on crypto firms
Reinforced a risk-based approach to fraud prevention
January 9, 2025 – Financial Services and Markets Act 2000 Amendment
Parliament officially amended the FSMA 2000, categorizing:
“Qualifying crypto assets”
“Qualifying stablecoins” as regulated investments within the UK’s financial perimeter.
Who Regulates Cryptocurrency in the UK?
The Financial Conduct Authority (FCA) is the main regulatory body overseeing cryptoassets. It ensures compliance with AML and CTF standards.
Prominent platforms like Coinbase and Gemini are registered with the FCA as Virtual Asset Service Providers (VASPs), offering secure and transparent crypto services to UK users.
Additionally, HM Treasury and the Bank of England contribute significantly to shaping the nation’s digital asset regulations. The FCA also enforces strict advertising standards to ensure crypto promotions are clear, fair, and not misleading.
Crypto Taxation in the UK (2025)
Investors & Traders
Tax Type
Rate/Allowance
Taxable Events
Reporting
Capital Gains Tax (CGT)
18% (basic), 24% (higher)
Selling, trading, spending, or gifting crypto (not to spouse)
Gains over £3,000 must be reported to HMRC
Income Tax
0–45% based on income bands
Mining, staking, airdrops, crypto payments
Income over £12,570 must be reported
Losses
Offset against gains
Can reduce CGT liability
Must be reported to HMRC
Exemptions
N/A
Holding, transferring between own wallets, or gifting to spouse
Not reportable
Note: Crypto exchanges must share user data with HMRC. Failure to report taxable events may result in penalties.
Crypto Companies
Tax Type
Rate/Allowance
Taxable Events
Reporting
Corporation Tax
25% (2025 rate)
Profits from crypto-related business
Annual returns to HMRC
VAT
Generally exempt
Applies only to some services
VAT returns if applicable
FCA Registration
Mandatory
AML/CTF compliance, licensing required
Ongoing compliance and record keeping
Payroll Tax
PAYE/NIC
Crypto used to pay employees
Must be reported
Record Keeping
Mandatory
Full transaction logs, KYC/AML data
Subject to FCA and HMRC audit
Crypto Licensing Rules for UK Companies
Aspect
Details
Regulatory Perimeter
Applies to exchanges, custodians, brokers, staking providers, stablecoin issuers
Mandatory Licensing
Required for all firms serving UK retail customers, including foreign companies
Regulated Activities
Includes trading, custody, staking, and arranging crypto transactions
Overseas Firms
Must be UK-authorized if targeting UK retail clients
Required Standards
Must meet standards on transparency, governance, risk, capital, and conduct
AML/CTF Compliance
FCA registration required for anti-money laundering obligations
Implementation Timeline
Draft order published April 29, 2025; applications open for one year
Penalties
Non-compliance may lead to enforcement, penalties, or criminal charges
Crypto Adoption Rate in the UK (2025)
The UK has emerged as the fastest-growing country in terms of crypto adoption, according to Gemini’s “State of Crypto” report.
Crypto user base: Over 23 million users
Adoption rate: 35.12%
Revenue forecast: Over $1.6 billion
Comparison: Outpacing the US and France (both at 21%); second only to Singapore (28%)
Notable trends:
28% of UK investors started with memecoins
41% of investors now hold spot crypto ETFs, placing the UK among the top ETF-adopting countries
12% of the population currently owns crypto, though the risk of scams and fraud remains a concern
UK Government’s Stance on Cryptocurrency
The UK government has not disclosed any official crypto holdings, but it supports legal crypto trading. While cryptocurrency is not legal tender, it is legal to buy, sell, or hold crypto assets under current UK regulations.
Final Thoughts
The UK is laying the foundation to become a global hub for cryptocurrency and digital assets. With robust legal frameworks, institutional clarity, and active efforts to foster innovation while ensuring consumer safety, the country is paving the way for a thriving crypto ecosystem. As these regulations unfold, the UK is set to play a defining role in shaping the future of crypto globally.
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FAQs
What is the UK’s crypto adoption rate in 2025?
The UK has over 23 million crypto users, with a 35.12% adoption rate, leading Europe in crypto engagement.
Who oversees cryptocurrency regulation in the UK?
The FCA regulates cryptoassets, working with HM Treasury and the Bank of England on comprehensive frameworks.
What is the UK tax on crypto?
Capital gains tax applies at 18%–24%, while income tax (0%–45%) applies to mining, staking, and crypto earnings over £12,570.