Kraken Warns UK Crypto Rules Slow Innovation
Kraken’s Co-CEO Arjun Sethi says UK crypto regulations, designed to protect investors, are slowing transactions and blocking access to many crypto products. Speaking to the Financial Times, Sethi compared UK warnings on crypto websites to cigarette box warnings, saying they discourage use. He added these measures make it harder for users to move funds quickly.
Sethi noted that Kraken’s UK customers cannot access about 75% of the products available to US users, including DeFi lending and yield opportunities. He warned that overregulation might push investors away from crypto altogether.
UK Regulatory Landscape Faces Criticism
The UK’s Financial Conduct Authority (FCA) introduced new rules at the end of 2023. These require crypto companies to clearly warn users about risks, ban investment incentives, and ensure customers understand products. Critics say these measures slow the market and risk pushing business abroad.
Senior Advisor at Consensys Bill Hughes highlighted that the UK focuses heavily on risks while the US embraces blockchain innovation. The FCA defended its stance, saying their rules help consumers make informed decisions, even if some opt out of investing.
UK Modernizes Crypto Infrastructure
Despite challenges, the UK is modernizing its crypto framework. The FCA approved London-based ClearToken to launch CT Settle, a regulated settlement system for digital assets. The platform aims to speed up and secure trading by allowing institutions to settle crypto, stablecoins, and fiat simultaneously.
The Bank of England also relaxed rules, allowing stablecoin issuers to invest 60% of their reserves in government bonds. However, limits on individual and corporate holdings remain at £20,000 and £10 million respectively.
Global firms are expanding crypto access in the UK. BlackRock recently launched its iShares Bitcoin ETF on the London Stock Exchange, offering investors safe exposure to Bitcoin through regulated infrastructure. Jane Sloan, BlackRock’s EMEA head, said the product combines robust custody with regulatory oversight.
The UK must find a balance between protecting investors and fostering innovation to remain competitive in crypto markets.
