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Britain will exempt overseas stablecoin issuers from complying with its new cryptocurrency rules, as ministers commit to closer co-operation with the US in regulating the emerging global market for digital assets.
The proposals, set out by chancellor Rachel Reeves on Tuesday, are part of the UK’s first attempt to write rules for crypto assets and reflects Britain’s attempts to forge a tech partnership with the US.
Reeves discussed closer tech co-operation with her US counterpart Scott Bessent in Washington last week, along with moves to secure a broader trade deal, intended to cut tariffs. “Talks continue,” said one British official.
The new rules will cover exchanges and brokers, market practices such as crypto lending and new enforcement powers for the Financial Conduct Authority, the UK’s main financial regulator, the Treasury said in a policy paper.
Britain’s push to regulate crypto assets has been given fresh impetus by US President Donald Trump’s return to the White House with a pledge to end a regulatory crackdown and deliver a more industry-friendly approach that would make America “the crypto capital of the world”.
In a speech to the Innovate Finance Global Summit in London, Reeves said “robust rules” around crypto would “boost investor confidence, support the growth of fintech and protect people across the UK”.
“Today’s announcement sends a clear signal: Britain is open for business — but closed to fraud, abuse, and instability,” she added.
The UK’s crypto sector is likely to welcome the draft legislation. It has been frustrated by the FCA’s rejection of almost nine out of 10 recent applications from crypto providers to register as complying with anti-money laundering rules.
Laura Navaratnam, UK policy lead at the Crypto Council for Innovation, a trade body, said the announcement marked “a big milestone for stablecoins and other crypto assets more generally in the UK”.
“The focus now shifts to the regulators, with the FCA expected to consult shortly on the regulation of fiat-backed stablecoins.”
One ally of Reeves said the chancellor and Treasury secretary Bessent last week “talked about trade, but also about strengthening the UK-US’s economic relationship beyond tariffs, including on technology and financial services”. The person added: “This is the first outcome of it.”
Lord Peter Mandelson, UK ambassador to Washington, is pushing for a UK-US tech partnership to be agreed alongside any trade deal to reduce tariffs on either side of the Atlantic.
The envoy last week hosted a digital assets event at his residence to coincide with Reeves’ visit to Washington for the spring meetings of the IMF and World Bank.
Nick Price, partner at law firm Osborne Clarke in London, said the UK’s approach “appears more aligned with the US, bringing crypto assets into the existing regulatory perimeter rather than developing bespoke legislation for them”.
The plans, which will be under consultation for a month, proposed issuers of stablecoins would not be required to be authorised in the UK, unless the issuer was based in Britain.
The tokens — which have become one of the most active corners of global crypto markets — are designed to maintain a steady value against a sovereign currency such as the US dollar, but sit outside the regulated banking system.
Roughly $240bn of stablecoins are in circulation, issued by El Salvador’s Tether and the US’s Circle.
Reeves’ discussions with Bessent last week covered “ideas for how we could allow for greater collaboration on digital securities between the UK and US”, including a transatlantic “sandbox” that would allow start-ups to test new business ideas for digital securities in a lighter regulatory framework.
US lawmakers are expected to pass stablecoin rules this year that will open the door for big Wall Street and Silicon Valley tech groups to enter the market, but will stop short of forcing overseas issuers to set up in America.
The UK’s planned stablecoin regulation contrasts with the stricter approach of the EU, which came into force in December.
Brussels requires “significant” stablecoins to meet tough rules on liquidity and reserves, and recovery and redemption plans — criteria that led some crypto companies to withdraw from the bloc.
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