- UK Treasury plans 2027 FCA rules for crypto firms, covering exchanges, wallets and service providers that deal with UK customers.
- New framework aims to cut rising scams and fraud cases, after a 55% jump in losses and a record seizure of 61,000 bitcoin.
- Government also prepares tighter rules on crypto political donations, after Reform UK received £9 million from a crypto investor.
The UK Treasury plans a full shift in how Britain treats cryptocurrencies, turning them into regulated financial products by 2027. The change brings crypto exchanges, wallets and other service providers under the same rulebook that applies to shares and investment funds, with the Financial Conduct Authority (FCA) in charge of supervision. The move follows sharp growth in crypto use, a surge in scams and a record bitcoin fraud that exposed weak points in the existing framework. At the same time, ministers are rethinking political donations as Reform UK receives a £9 million gift from a crypto-linked donor that sets a new record.
UK Treasury plan for 2027 crypto regulation
Under draft legislation, the UK Treasury wants cryptoassets regulated in line with traditional finance from October 2027. The plan extends existing financial services law, instead of creating a separate crypto code, and leans closer to the United States model than the EU’s MiCA regime, which built a bespoke framework in 2024. Today, only firms that fall within money-laundering rules must register with the FCA. In future, exchanges, custodians and wallet providers will face the same conduct, disclosure and reporting duties as firms that sell funds or structured products. Rachel Reeves, the chancellor, frames the package as a way to keep London competitive as a financial centre while setting “rules of the road” that reduce confusion for firms and users. The government argues that clear expectations on governance, capital, risk management and customer communication should make it easier to launch new products without constant legal uncertainty. The UK Treasury also signals that stablecoins and crypto custody rules from the FCA and the Bank of England should be ready by the end of 2026, so the whole system can start on a defined timetable rather than in pieces.
FCA oversight and consumer protection in the UK crypto market
The new regime turns the FCA into the central gatekeeper for the retail crypto market. Any company that serves UK customers with trading, custody, staking, lending or on-ramp services will need authorisation, not just an anti-money laundering registration. That change lets the regulator enforce transparency rules, require clearer risk warnings and step in faster when platforms show signs of distress. Ministers expect better information to narrow the gap between how people understand regulated investments and how they see highly volatile tokens. Fraud data explains why this focus on protection has moved up the agenda. Banking and industry figures show that money lost to investment scams jumped by 55% in a single year, reaching about £97.7 million in the first half of 2025 alone, with fake crypto investments thought to lead the list. UK Finance reports that overall fraud losses hit £629 million over the same period, while criminals use artificial intelligence to scale deepfake adverts and fake trading dashboards. The FCA has responded with new tools such as its Firm Checker, and the UK Treasury wants the regulator’s warnings backed by direct powers over any firm that markets digital assets to the public.
UK Treasury crackdown on fraud after record bitcoin seizure
The regulatory push also reflects high-profile crime cases, especially the multibillion-pound bitcoin fraud linked to Chinese national Zhimin Qian, also known as Yadi Zhang. Between 2014 and 2017 she ran an investment scheme in China that defrauded around 128,000 people, many of whom invested life savings on the promise of high returns. Investigators say she moved part of the proceeds into bitcoin, then came to the UK using false documents and tried to buy luxury property as a way to launder funds. In 2018, police raided a Hampstead mansion and seized devices that led them to 61,000 bitcoins, described as the largest confirmed cryptocurrency seizure in the world and valued at more than £5 billion at current prices. After a seven-year investigation, a London court sentenced Qian to 11 years and eight months in prison for possessing and transferring criminal cryptocurrency. For ministers, the case highlights how cross-border fraud can exploit gaps between financial crime law, technology and supervision. The UK Treasury uses it as an example of why police, regulators and courts must work with a clearer framework when they trace, freeze and confiscate criminal crypto holdings.
Political donations, Reform UK and the future of crypto transparency
Alongside market rules, the government is drafting plans to ban political donations made directly in cryptocurrency. Officials worry that tokens can move through mixers, offshore exchanges and private wallets in ways that make origin and ownership hard to verify under existing electoral law. The issue has gained weight because Reform UK became the first British party to accept significant crypto-related contributions this year and has set up a portal to collect them with what it describes as enhanced checks. The debate intensified when the Electoral Commission confirmed that Reform UK received £9 million from Christopher Harborne, a British-Thai cryptocurrency investor and aviation entrepreneur based in Thailand. That single transfer is the largest donation ever made by a living person to a UK political party and helped push Reform’s total quarterly donations above £10 million, more than any other party in that period. The gift was in cash, not tokens, but it sharpened concern about the influence of wealthy crypto investors on party finances and policy debates. The UK Treasury now signals that political money flows will need the same level of transparency it expects from the trading venues those investors use.
Conclusion
The UK now faces a three-part task: turning the UK Treasury’s 2027 vision for crypto regulation into detailed law, equipping the FCA to police a market that already moves billions of pounds a day, and tightening rules on political money so that rising crypto wealth does not erode trust in elections. The 55% jump in investment scam losses, the £97.7 million stolen in half a year, and the 61,000-bitcoin seizure from a single fraud case underline the scale of the challenge. How well the new regime balances innovation with enforcement will decide whether London can host a busy crypto sector without repeating the excesses and failures that forced this overhaul.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
Featured image created by AI
