Crypto Regulations in the United Kingdom 2025

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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?

Key Regulatory Developments in 2025

August 1, 2025 – FCA Lifts Ban on Crypto ETNs

From 8 October 2025, UK retail investors will be allowed to invest in crypto exchange-traded notes (CETNs).

The new development in the UK’s regulatory approach to crypto comes after the FCA banned crypto ETNs in January 2021, citing extreme volatility. 

June 2025 – Financial Conduct Authority (FCA) Creating Crypto Regulatory Framework 

Officials are conducting discussions to create a new regulatory framework for crypto. 

Looking forward to regulating trading platforms, intermediaries, and activities like staking and lending. 

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.

According to a recent FCA report, the agency wants to balance innovation with investor safeguards by easing some requirements while also toughening oversight in areas like cybersecurity. The FCA’s consultation paper will be available till November 12, 2025, for public feedback, and the final rules will be published in 2026. 

Crypto Mining in the UK 2025 

Crypto mining is legal in the UK as of 2025, but investors must comply with tax regulations set by the HMRC (UK’s tax authority) and be aware of potential future environmental and energy consumption laws.

Mined cryptocurrency is considered taxable income, with potential Capital Gains Tax (CGT) for hobby mining and Income Tax for full-time mining operations. 

Overall Crypto Use in the UK 2025 

According to a WisdomTree survey conducted by Opinium on 1,000 UK investors revealed that only 2 of them will more likely use cryptocurrencies if their financial institution offered access. 

20% of UK investors, meaning 1 in 5, agreed that any change in the local market will influence their view of crypto. 26% of those engaged in crypto activity said they use crypto as a retirement plan, while the other 21%, meaning 1 in 5 investors, are saving towards a home purchase. Approximately 23% of UK investors say they might put more than 10% of their money into crypto, showing that excitement may be outpacing careful understanding.

To boost returns without risks, WisdomTree’s research suggests that adding just 1% of crypto to a mixed investment portfolio will help. 

The majority of Crypto Users in the UK   

According to Gemini’s 2025 crypto report, 24% of UK survey respondents now hold crypto, showing a rise from 18% in 2024. 

48% of those crypto holders are under the age of 35

88% want to allocate 5% of assets to crypto, while 52% said they were likely to buy

95% of those who already own crypto are planning to buy next year

51% of UK crypto owners are aware of crypto ETFs, despite them not being available

48% of crypto owners plan to invest in thedse products

Crypto Taxation in the UK (2025)

Investors & Traders

Tax TypeRate/AllowanceTaxable EventsReportingCapital Gains Tax (CGT)18% (basic), 24% (higher)Selling, trading, spending, or gifting crypto (not to spouse)Gains over £3,000 must be reported to HMRCIncome Tax0–45% based on income bandsMining, staking, airdrops, crypto paymentsIncome over £12,570 must be reportedLossesOffset against gainsCan reduce CGT liabilityMust be reported to HMRCExemptionsN/AHolding, transferring between own wallets, or gifting to spouseNot reportable

Note: Crypto exchanges must share user data with HMRC. Failure to report taxable events may result in penalties.

Crypto Companies

Tax TypeRate/AllowanceTaxable EventsReportingCorporation Tax25% (2025 rate)Profits from crypto-related businessAnnual returns to HMRCVATGenerally exemptApplies only to some servicesVAT returns if applicableFCA RegistrationMandatoryAML/CTF compliance, licensing requiredOngoing compliance and record keepingPayroll TaxPAYE/NICCrypto used to pay employeesMust be reportedRecord KeepingMandatoryFull transaction logs, KYC/AML dataSubject to FCA and HMRC audit

Crypto Licensing Rules for UK Companies

AspectDetailsRegulatory PerimeterApplies to exchanges, custodians, brokers, staking providers, stablecoin issuersMandatory LicensingRequired for all firms serving UK retail customers, including foreign companiesRegulated ActivitiesIncludes trading, custody, staking, and arranging crypto transactionsOverseas FirmsMust be UK-authorized if targeting UK retail clientsRequired StandardsMust meet standards on transparency, governance, risk, capital, and conductAML/CTF ComplianceFCA registration required for anti-money laundering obligationsImplementation TimelineDraft order published April 29, 2025; applications open for one yearPenaltiesNon-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 Crypto Holdings

While cryptocurrency is not legal tender, it is legal to buy, sell, or hold crypto assets under current UK regulations. The UK government manages to hold one of the largest Bitcoin reserves with approximately  61,245 Bitcoins worth around $6.52 billion.

The primary source of this BTC accumulation is the seizure and forfeiture of cryptocurrencies linked to criminal activities. The assets are often confiscated as part of investigations and legal proceedings, and then held by the government.

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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