- UK crypto firms brace for new rules.
- Crypto UK group tells DL News why this will help the industry.
- Crypto has long tried to balance privacy and clarity.
In a move that contrasts with relaxed scrutiny in the US, Britain is ramping up reporting requirements for crypto companies.
HMRC, the UK’s tax authority, will snap new rules into place on January 1 and direct cryptoasset firms to report users’ personal details — such as name, date of birth, and home address — to the authorities for every trade made.
The twist? The UK crypto industry is okay with that.
“If you didn’t expect that you would have to be in this position to meet these levels of compliance and to operate within these frameworks — where have you been for the last few years?” said Su Carpenter, executive director of CryptoUK, the industry trade association that represents some 150 crypto market stakeholders.
Legal uncertainties
In an exclusive interview with DL News, Carpenter said the UK government is finally giving the industry what it wanted for years — regulatory clarity.
By governing blockchain ventures the same as other financial firms, the industry believes it can finally erase the legal uncertainties that have shadowed its operations.
For years, the crypto lobby complained that an absence of crypto laws emboldened regulators, such as the Financial Conduct Authority, to be tougher than they needed to be.
A similar argument was made in the US to explain the Securities and Exchange Commission’s crypto crackdown under former Chair Gary Gensler.
In response, firms like Binance and PayPal suspended their UK crypto services.
“It’s been really quite damaging to the UK because businesses who were going to invest have chosen not to,” Carpenter said.
‘Best place in the world’
That may be about to change. The tax authority’s new rules is one part of it.
The government also unveiled a draft crypto law in April that it’s asking for feedback on. Similarly, the FCA called for comments on its own crypto policing on May 28.
“We are making Britain the best place in the world to innovate — and the safest place for consumers,” Rachel Reeves, the Chancellor of the Exchequer, said in April.
“Robust rules around crypto will boost investor confidence, support the growth of fintech and protect people across the UK.”
Yes, that means more background checks to prevent financial crimes, and higher compliance costs are on the horizon.
Compliance first
But that’s the price the industry and customers must pay for playing, Carpenter argued.
“If you’re not thinking about compliance first, then you’re probably not the right kind of business to succeed long term within this industry anyway,” she said.
Fintech hotbed
The UK has long supported fintech startups.
Revolut, the neobank that has offered crypto trading for years, is now worth $45 billion. EToro, an Israeli-British online trading platform that pioneered retail crypto investing, went public on the Nasdaq earlier in May.
Konstantinos Adamos, Revolut’s top crypto lawyer, has also welcomed the renewed regulatory efforts.
“The UK’s regime will bring certainty, clarity, and create a level playing field,” Adamos told DL News earlier in May. “This is a net positive.”
Anonymity first
Carpenter’s comments mark a dramatic shift for an industry that has put privacy at its core ever since Satoshi Nakamoto, the pseudonymous developer behind Bitcoin, kickstarted the cryptocurrency industry in 2008.
Indeed, anonymity is a rallying cry for crypto enthusiasts worried about the mounting threat of abductions of founders, attacks on influencers, and cyberattacks such as the recent Coinbase hack, which compromised just shy of 70,000 users’ personal data, according to legal filings.
Fears are mounting that criminals can access information about crypto holders via public records, or through data stored by companies who comply with know-your-customer rules.
Know-your-customer checks, or KYC, is a process many businesses are legally required to perform to verify customers’ identities and prevent money laundering and other crimes.
While Carpenter said she understood crypto enthusiasts’ trepidation, she said CryptoUK is “100% behind” strong due diligence and KYC to protect both businesses and consumers.
“If you’re an honest person and you’re dealing with an open, honest, compliant business, then why is there a concern in you wanting to provide those details?” she said.
UK crypto rules
In 2022, then-Prime Minister Rishi Sunak pledged to transform the UK into a hotbed for digital assets.
His Conservative government positioned itself as an industry ally and urged regulators not to undermine crypto companies by stifling innovation and enforcing rules too strictly.
Last year, crypto laws were on the cusp of becoming a reality. Those efforts stalled when Sunak called and lost a snap election.
In late 2024, his successor, Keir Starmer, pledged to renew those efforts after Donald Trump was elected president in the US with the strong support of the crypto industry.
Trump wasted no time in relaxing scrutiny of the industry and pursuing several crypto businesses of with his family.
The US SEC dropped or suspended virtually all the enforcement actions it was taking against the likes of Coinbase, Ripple, as well as individuals such as crypto billionaire Justin Sun.
Starmer’s Labour government took notice, not necessarily in how it approached crypto, but in terms of actually paying attention to it, Carpenter said.
“The government here couldn’t ignore it any longer,” she said.
But little happened. By April, the crypto industry grew tired of waiting even as the US market became more dynamic, and the EU pressed ahead, with its sweeping Markets in Crypto-Assets, or MiCA, law.
Industry leaders called for the British government to act. “The UK has lagged behind other major jurisdictions,” Matthew Osborne, Ripple’s policy director of Europe, complained in April.
Now it seems as if the industry is poised to get what it’s desired for so long with Westminster moving forward with laws and regulators asking for feedback on regulations.
“We’re back on track,” Carpenter said.
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.