Digital currencies: 5 reasons we’re calling for information

Digital currencies: 5 reasons the UK is calling for information — plain‑English review, practical guide + FAQ

Quick question: Did you see the UK’s “Digital currencies: 5 reasons we’re calling for information” and think, “Is this good or bad for my crypto—and what should I actually do next?”

Describe problems or pain

Regulation headlines are loud. Real clarity is quiet. Most of what you read doesn’t tell you what changes today, what might change tomorrow, or how to protect yourself in the meantime.

Here’s what I hear from readers every week:

• “Are they banning anything?” Every time a government post goes live, social feeds explode with half-truths. In reality, lots of announcements are early steps—not bans.
• “Will my bank block me?” UK banks have tightened controls. Some set card limits for crypto purchases; others block credit card buys entirely. It’s not universal, but it creates constant uncertainty.
• “What about tax?” HMRC treats most disposals as capital gains, and the personal CGT allowance has been cut in recent years—so more people get pulled into reporting, sometimes after they’ve already spent the gains.
• “How do I avoid scams?” UK fraud reports show year‑on‑year growth in crypto investment scams. Rug pulls, fake endorsements, and “guaranteed yield” traps keep evolving.
• “I’m building something—what are the rules?” Founders worry about FCA registration, financial promotions rules, and compliance costs. Unclear guidance makes product roadmaps harder and banking relationships fragile.

The reality: plenty of people in the UK use crypto—FCA research has repeatedly found that millions of UK adults have bought digital assets at least once—but the noise makes smart decisions harder than they need to be.

“Digital currencies: 5 reasons we’re calling for information” is the UK asking the market to share what’s promising, what’s risky, and where rules should go next. It’s an evidence‑gathering step—not a crackdown.

Promise solution

I’ll strip out the jargon and get to what matters. No policy PDFs required.

• Plain English breakdown: I’ll explain the UK’s “5 reasons” and what each one means for users, builders, and investors—without guessing or fear‑mongering.
• Real‑world impact: You’ll see how this could shape banking access, exchange features, stablecoin availability, and safer custody norms.
• Actionable checklist: I’ll share a quick way to assess platforms, risks, and next steps—useful whether you’re buying your first £100 or shipping a new wallet.
• Community‑tested answers: I’ll cover the questions I get most often, so you can stop scrolling and start acting.

What this guide includes and who it’s for

If you’re a UK crypto user, trader, or startup founder, this guide gives you two things you rarely get together: the big picture and practical takeaways you can use this week.

• What’s inside: What a “call for information” actually is, why the UK chose this route, how the five themes translate to everyday decisions, and how to prepare without overreacting.
• Who it’s for: Everyday buyers, active traders, wallets and exchange teams, DeFi and payments builders—anyone who needs clarity without a compliance degree.

Want the noise filtered into signal? Up next, I’ll explain exactly what the UK asked—and why it matters now. Ready to see the five reasons in simple terms and how they might shape your next move?

What the UK government actually asked—and why it matters now

Let’s cut through the noise. A “call for information” is the UK’s way of asking everyone who actually uses or builds crypto to share real-world evidence before they write new rules. It’s not law. It’s not a ban. It’s an open invitation from HM Treasury to users, exchanges, wallet providers, developers, academics, banks—anyone with skin in the game—to tell them what’s working, what’s breaking, and what needs fixing.

Why it matters now: crypto isn’t a fringe hobby anymore. Stablecoins are inching into payments, scams are getting more sophisticated, and the UK wants to be a serious hub without turning a blind eye to risk. The outcome of this process shapes how the FCA, the Bank of England, and HMRC set the guardrails—so the feedback they get today becomes the policy you live with tomorrow.

“Sunlight is said to be the best of disinfectants.” — Louis Brandeis

That’s exactly the spirit here: surface the facts, reduce guesswork, and build rules that reward good actors.

The 5 reasons in plain English

Here’s what the government is really trying to solve, minus the policy jargon.

• Consumer protection
  Goal: Stop people getting wrecked by scams, misleading ads, and sloppy custody.
  What that looks like:

  • Standard risk warnings and fair advertising (the FCA’s crypto promotions regime has required this since October 2023).
  • Clearer rules on how customer assets are held and separated from company funds.
  • Fewer rug pulls, less “guaranteed yield” nonsense, and better recourse when things go wrong.

  Real-world signal: Action Fraud has reported losses in the hundreds of millions of pounds annually from crypto investment scams—evidence the government can’t ignore.

• Financial crime controls
  Goal: Keep illicit money out without choking legitimate users.
  What that looks like:

  • KYC and AML checks that scale with risk.
  • Following the FATF Travel Rule (the UK’s version has applied since 2023) so transfers carry the right sender/receiver data.
  • Sanctions screening and suspicious activity reporting baked into platforms.

  Real-world signal: The FCA has already forced UK-facing firms to register under the Money Laundering Regulations and has taken action where controls were weak.

• Innovation and competition
  Goal: Make the UK a place where crypto and fintech can actually ship products—not just PowerPoints.
  What that looks like:

  • Predictable rules for launching and scaling products (no regulatory whiplash).
  • Sandboxes and pilots, like the Digital Securities Sandbox, to test tokenised markets with real users.
  • Banking access for compliant startups so they’re not stranded at the on/off-ramp.

  Real-world signal: UK fintech thrives when the rules are clear (think Open Banking). Crypto is looking for that same clarity.

• Financial stability and payments
  Goal: If stablecoins take off for everyday payments, make sure nothing breaks the system.
  What that looks like:

  • Fiat-backed stablecoins used for payments being supervised like serious financial products.
  • High-quality reserves, 1:1 redemption, and fast payouts—even in stress.
  • Playbooks for what happens if a big issuer or wallet provider fails.

  Real-world signal: The Bank of England has set out how “systemic” payment stablecoin issuers could be overseen, with coordination alongside the FCA.

• Tax treatment
  Goal: Make tax rules consistent and workable for users and businesses.
  What that looks like:

  • Clearer guidance on capital gains, income from staking/mining/airdrops, and business vs. personal activity.
  • Better record-keeping expectations and maybe smarter, optional reporting tools.

  Real-world signal: HMRC’s Cryptoassets Manual already sets the baseline; this step is about patching the grey areas (like certain DeFi transactions).

What a “call for information” means for you

This is the research phase. Policymakers are building a map from community evidence, market data, and international standards. Nothing is banned here—this is the stage that guides what comes next.

• Users
  Expect clearer risk warnings, better disclosures, and safer custody norms. Onboarding might feel stricter (smarter KYC), but the trade-off is fewer surprise blocks and more trusted platforms. If stablecoins get a green light for payments, expect smoother GBP on/off-ramps with well-run issuers.
• Exchanges and brokers
  Registration isn’t optional, marketing must follow the FCA promotions rules, and Travel Rule compliance is now table stakes. Be ready for clearer token listing standards, incident reporting, and pressure to publish proof-of-reserves or equivalent transparency.
• Wallet providers
  If you hold user funds (custodial), expect stronger segregation, audits, and resilience testing. If you’re non-custodial, you’ll still feel it around promotions, app-store policies, and how you connect to regulated ramps.
• DeFi and developers
  Front-ends that target UK users may need compliant messaging and safer defaults. Protocols won’t suddenly fall under full-blown rules, but anything that looks like custody, promotion, or payments will be watched. Think: disclosures, transaction screening options, and transparent governance.

Bottom line: if you’re already building with KYC, clear disclosures, and asset segregation, you’re on the right side of history. If not, this is your early warning.

Timeline and where this fits in the UK’s crypto journey

• 2019–2020: FCA becomes the anti-money laundering supervisor for UK crypto firms. Registration under the Money Laundering Regulations starts.
• 2021: Tougher scrutiny on high-risk platforms and ads; the ASA and FCA start pushing back on misleading promotions.
• 2022: Government signals intent to bring crypto within a broader financial services framework; work begins on promotions and stablecoins.
• 2023: The Financial Services and Markets Act gives regulators clear powers over cryptoassets. The FCA’s crypto promotions rules go live in October. The UK’s Travel Rule for crypto transfers starts in September.
• 2024: HM Treasury and the Bank of England set out how fiat-backed stablecoins used for payments could be regulated. The Digital Securities Sandbox opens for tokenised market trials.
• 2025 (now): The focus is on implementing a stablecoin framework and sketching the next phase for trading venues, custody, and disclosures. Expect phased rollouts—starting with payments use-cases—before broader spot market rules land.

So here’s the real question: can the UK back real innovation while shutting the door on scams and chaos? In the next section, I’ll show you exactly how regulators weigh “innovation vs protection” and what that tug-of-war means for your strategy—want the unfair advantage?

The big themes: innovation vs protection, and how the UK balances both

Here’s the tension at the heart of UK crypto policy: let good ideas run fast, but stop the blow-ups before they happen. It’s not anti-crypto; it’s pro-safety and pro-responsibility. If you’re building or investing, understanding how regulators think is a growth hack—because you’ll anticipate what gets greenlit and what gets blocked.

“If you invest in cryptoassets, you should be prepared to lose all your money.”
— Financial Conduct Authority

That warning isn’t a threat. It’s a filter. The UK wants fewer scams, clearer ads, safer custody—and more real utility. If we can hit that balance, the market wins trust and liquidity. If not, the friction stays: bank blocks, ad bans, shaky rails.

Consumer protection: scams, misleading ads, and custody risks

Scams drain confidence and invite crackdowns. In the UK, reports of crypto investment fraud run to hundreds of millions of pounds a year according to Action Fraud. That’s why the UK is ultra-focused on three hotspots:

• Misleading promotions. The FCA’s crypto financial promotion rules (PS23/6) require standardized risk warnings, a 24‑hour cooling‑off period for first‑time buyers, and ban “refer‑a‑friend” style incentives.
• Ads that oversell and under-explain. The UK Advertising Standards Authority has pulled up campaigns from household names—think Papa John’s, Arsenal, and Crypto.com—for missing risk info or implying “get rich quick.”
• Custody that doesn’t actually safeguard assets. After 2022’s collapses, “proof of reserves” became a buzzword, but a Merkle-tree snapshot without clear liabilities or auditor assurance isn’t protection. UK policymakers want segregation of client assets, strong operational resilience, and clear legal rights if a firm fails.

What regulators look for (and what you should, too):

• Clear, authorized promotions. If a UK firm is soliciting you, check who approved the promotion on the FCA Register.
• Real custody hygiene. Cold storage, MPC, independent security audits, and transparent terms stating who legally owns what. If it’s not written, it doesn’t count.
• Honest risk language. Volatility, fees, and limitations spelled out up front—no hiding the downsides.

The emotional reality: nobody wants that 3 a.m. “are my funds safe?” spiral. Good platforms tackle that fear with clarity, not hype.

Financial crime and AML: what compliance really means

UK rules already put cryptoasset exchange and custodian wallet businesses under anti‑money laundering regulations. Registration with the FCA is mandatory, and the Travel Rule now applies to crypto transfers.

In practice, “we’re compliant” should look like this:

• KYC that’s smart, not sloppy. Document verification, sanctions and PEP screening, and ongoing monitoring—not just a one‑time selfie.
• Travel Rule data exchange. Originator/beneficiary info travels with the transaction when sending between compliant providers. If the counterparty can’t receive Travel Rule data, UK firms must assess and mitigate the risk.
• Suspicious activity reporting. Timely SARs to the NCA, plus clear processes to freeze or reject risky funds.
• On‑chain analytics with teeth. Taint analysis, cross‑chain tracing, and sanctions alerts. If a platform never flags anything, that’s a red flag.
• Transparency reports. Annual stats on law‑enforcement requests and outcomes, as leading exchanges already publish.

Yes, compliance adds friction. But it’s also what keeps bank access open and regulators onside. In the UK, firms that cut corners often end up on the FCA’s warning list—or cut off by payment providers.

Financial inclusion and competition: could crypto lower costs?

Crypto’s promise gets real when it makes money move cheaper and faster. The World Bank still puts average cross‑border remittance fees around 6%. Stablecoins can move value for pennies in minutes. That’s a big deal for freelancers, SMEs, and families sending money abroad.

But there’s a catch: on/off‑ramps. UK banks have tightened rules due to fraud risk, with some setting limits or delays on transfers to exchanges. That means the tech is fast, but access can be slow.

What could unlock the benefits:

• Regulated fiat‑backed stablecoins for payments. HM Treasury has set out plans to bring them into the payments perimeter so merchants and fintechs can use them with confidence.
• Open banking + compliant ramps. Combine Faster Payments with robust AML, and you get instant-ish settlement without card fees.
• Clear merchant rules. If chargebacks and safeguarding are defined, acceptance grows. Uncertainty kills adoption.

Net-net: crypto can absolutely lower costs. The question is whether the plumbing—banks, compliance, and consumer protections—lets that value through.

Financial stability and payments plumbing

Once stablecoins scale, they start to look like money market funds glued to a payments app. That’s why the UK is building a tailored regime: HM Treasury’s plans to regulate fiat‑backed stablecoins used for payments sit alongside the Bank of England’s proposals for systemic stablecoin oversight. Expect requirements like:

• 1:1 high‑quality reserves (cash and short‑dated gilts), held with regulated custodians, ring‑fenced from issuer liabilities.
• Redeemability at par with prompt settlement—think T+0 or close.
• Operational resilience at payments‑system levels: outages, cyber, concentration risk in wallets and issuers.
• Clear legal claims for holders if an issuer fails.

Why so strict? We’ve seen what happens when pegs wobble—UST’s 2022 collapse and USDC’s 2023 de‑peg shook user confidence. The UK wants stablecoins that behave like safe money for payments, not high‑beta tokens with a steady logo.

Useful sources if you like the policy detail:

• Future financial services regulatory regime for cryptoassets (HM Treasury)
• Bank of England: Digital currencies and stablecoins

Tax basics in the UK

Crypto is taxable. The rules are not impossible—if you build good habits now.

• Capital Gains Tax (CGT). Selling, swapping, spending, or gifting (except to a spouse/charity) is a disposal. You calculate gains using GBP values and the share pooling and 30‑day rules.
• Income tax. Some rewards (staking, referral bonuses, certain airdrops, mining) can be taxed as income when you receive them, then CGT may apply when you later dispose of those assets.
• DeFi is nuanced. Returns from lending/liquidity can be income or capital depending on the arrangement. HMRC has guidance, but facts matter—document what you did.
• Annual CGT allowance. The tax‑free CGT allowance has been reduced in recent years; check the current threshold for the tax year you’re filing.
• Records, records, records. Keep dates, GBP values, fees, wallet addresses, and transaction IDs. Good tax software helps, but it’s only as accurate as your inputs.

Start with HMRC’s official resource: Cryptoassets Manual. It’s not light reading, but it’s the source.

Quick tip: if you moved coins between your own wallets, note those transfers too. They aren’t disposals, but missing internal transfers is the #1 reason people double‑count gains.

So where does all this land for you—the user trying to trade safely, the investor chasing better liquidity, or the startup planning a roadmap? That’s exactly what I’m unpacking next: what might change in your day‑to‑day and how to prepare without guessing. Ready to get specific?

If you’re a user, investor, or builder—what might change for you

Here’s the unfiltered version: policy talk is about to become product reality. That means clearer rules on who can market to you, tougher checks on who you are, more consistent custody standards, and new expectations for stablecoins, listings, and data handling. It also means fewer surprises if you prepare now.

“Regulation isn’t the enemy of crypto—opacity is. The market rewards teams who can show their math.”

For everyday users

You’ll feel changes in the sign-up, funding, and “is this ad trustworthy?” moments. In short: cleaner products, stronger ID checks, fewer hypey promos, and safer custody by default.

• Stronger KYC, sometimes slower transfers: Expect enhanced identity and source-of-funds checks, especially when moving funds between platforms. Rules like the Travel Rule mean UK platforms must send/receive payer and payee information with crypto transfers—cross-border transfers may be paused if the other side isn’t compliant. See the FCA’s crypto rules hub: fca.org.uk/firms/cryptoassets.
• Ads with real risk warnings (and fewer gimmicks): You’ll see prominent disclosures, 24-hour “cooling-off” periods for first-time buyers with some platforms, and bans on “refer-a-friend” style incentives under the UK’s promotions regime. The FCA has already flagged hundreds of non-compliant crypto ads since the rules kicked in.
• Stablecoins that act like money: Access to fiat-backed stablecoins should get clearer and safer as issuers and custodians are brought under UK oversight for payments. Expect more transparency about reserves, redemption rights, and where funds are safeguarded.
• Custody that actually protects you: Platforms will lean into segregation of client assets, incident playbooks, and better disclosures on how your coins are stored. If a provider can’t explain hot/cold storage ratios and key management, that’s a red flag.

What to do now:

• Keep your ID documents up to date and expect occasional re-verification.
• Use platforms that explain custody in plain English and support hardware wallet withdrawals.
• Be skeptical of one-click “earn” claims and always read the new risk summaries in full.

For investors and traders

The signal you want: liquidity, clean listings, and proof that platforms can back their claims. The new UK tone nudges the market in that direction.

• Stick to FCA-registered venues (or those using an approved promoter): The UK keeps a public cryptoasset register. It’s not investment approval, but it shows AML compliance. Check it here: FCA Cryptoasset Register.
• Listings get choosier: Expect fewer “fast” meme listings and more documentation around token due diligence. If a platform shares a listing policy, read it. Surprise delistings can create tax and portfolio headaches.
• Proof-of-reserves becomes table stakes: Look for independent attestations with a Merkle tree you can verify—plus a statement about liabilities. Some platforms (e.g., OKX, Kraken, BitMEX) publish routine PoR; ask how often and what methods they use.
• Tax habits matter: HMRC expects records of buys, sells, swaps, and rewards. Tracking now means fewer regrets later. HMRC’s crypto manual is here: gov.uk/hmrc-internal-manuals/cryptoassets-manual.
• Context for risk: On-chain crime exists but is a small slice of total activity. Chainalysis estimates illicit crypto volume accounts for well under 1% of total transaction volume globally—still material, but dwarfed by legitimate use. That’s why provenance checks and clean counterparties matter for your accounts and banking access.

What to do now:

• Prefer platforms with FCA registration or clearly approved promotions for UK users.
• Bookmark each exchange’s PoR page; verify your balances where possible.
• Start a consistent tax workflow (export CSVs monthly; tag transfers; store TX hashes).

For startups and exchanges

The UK is nudging everyone toward “compliance by design.” It’s not just paperwork—it’s product.

• Registration and scope: If you operate as a cryptoasset exchange or custodian in the UK, Money Laundering Regulations (MLRs) registration with the FCA is foundational. Products touching payments with fiat-backed stablecoins will face additional oversight (FCA/Bank of England/PSR).
• Financial promotions (FSMA s21): Retail-facing messages to UK users must be fair, clear, and not misleading—and either approved by an FCA-authorised firm or fall within a narrow exemption. Build compliant “journeys” with risk warnings, appropriateness tests, and mandated cooling-off.
• Banking relationships: UK banks reward predictability. Expect enhanced due diligence, transaction monitoring expectations, and clear policies on sanctioned addresses. Clean MI, blockchain analytics, and stable operational KPIs reduce friction.
• Data protection is not optional: UK GDPR applies. Encrypt data at rest and in transit, define retention schedules, run regular DSR drills, and prepare to notify the ICO within 72 hours if you suffer a breach. Guidance: ico.org.uk.
• Custody standards: Segregate client assets, document key ceremonies, enable withdrawal allowlists, and publish asset-liability frameworks. Have a plan for incident disclosure within hours, not days.
• Roadmap sanity checks: Stablecoin integrations, staking-as-a-service, and yield products need legal sign-off and crystal-clear T&Cs. Design for UK users from day one—don’t ship and patch later.

What to do now:

• Map your product flows to MLRs and promotions rules; document everything.
• Line up an authorised promotions approver early (or restructure messaging to avoid retail promotions).
• Institute quarterly tabletop exercises: fraud spike, wallet compromise, data breach, sanctions hit.

For wallets, DeFi, and developers

Open-source code is global; your interface might not be. If you offer a UK-facing front-end, you’ll need to think like a regulated front door—even if the protocol is permissionless.

• Front-ends and promotions risk: If your site or app makes statements that could be a financial promotion to UK users, you may need approvals, gating, or to change the copy. Geofencing alone won’t save sloppy claims.
• On/off-ramps are the chokepoint: Fiat ramps will enforce KYC, Travel Rule data, and sanctions screening. Design smooth, honest UX for these checks and set user expectations in-product.
• Custodial vs non-custodial: If you hold customer keys, expect MLR registration and robust safeguarding rules. If you’re non-custodial, focus on transparent risks, clear fees, and real audits of smart contracts.
• Security receipts users can understand: Publish audit reports (with remediation notes), maintain active bug bounties, and show upgrade timelocks or multisig policies. Your threat model should be public, not a secret.
• Travel Rule interoperability: If you operate a custodial wallet, pick a standard early (e.g., TRISA/Travel Rule Protocol) and test cross-border flows so user transfers don’t get stuck.
• Privacy without panic: You can use privacy-preserving analytics and on-chain risk screening without deanonymizing users. Document your approach—banks and users will ask.

What to do now:

• Review all user-facing text for promotion triggers; implement approval or adjust wording.
• Ship a public security page: audits, bounties, wallet policies, incident history.
• Test withdrawals to Travel Rule and non-Travel Rule counterparties; handle fallback cases gracefully.

I’ve given you the likely changes and the moves to make. Next, want my exact checklist for picking platforms that won’t waste your time or put your coins at risk? In the very next section, I’ll walk you through the simple framework I use every week—the same one that’s saved readers from bad actors more times than I can count.

How I evaluate crypto platforms in a world of clearer rules

Regulation is finally growing up. That’s good news—if you pick platforms that act like grown-ups too. Here’s exactly how I size them up so you don’t learn the hard way.

“Not your keys, not your coins.” — a maxim that gets truer every cycle

My Cryptolinks-style checklist for safer picks

I keep this simple on purpose. You can run through it in 10 minutes and instantly spot 80% of the risk.

• Registration and legal footprint

  • Search the FCA cryptoasset register for the firm’s legal name. If you can’t find it, don’t guess—ask the platform to point you to their entry.
  • Check the FCA warning list. If they’re on it, that’s a full stop.
  • Look for a real UK or EEA legal entity and a physical address, not just a PO box or a shell in a secrecy jurisdiction.

• Leadership and accountability

  • Named executives and compliance leads with public profiles and prior track records. Anonymous leadership + custody = no thanks.
  • Clear ownership structure. If it’s impossible to tell who actually controls client assets, move on.

• Proof-of-reserves (PoR) done properly

  • Look for a Merkle-tree PoR that lets you verify your own balances were included.
  • Liabilities matter. PoR should show assets and how client liabilities are covered. Asset screenshots alone prove nothing.
  • Third-party attestation beats “trust us.” Examples worth studying: Kraken’s PoR, OKX monthly PoR. Public-company financials (e.g., auditors, segregated custody disclosures) are another strong signal.

• Security posture

  • MFA that supports app-based codes and hardware keys (FIDO2/U2F). Email-only 2FA is weak.
  • Withdrawal protections: address allowlists, 24-hour withdrawal delays on new addresses, and optional geo/IP locks.
  • Independent audits like ISO 27001 or SOC 2 Type II. Bonus points for active HackerOne bounties and a public security page.
  • Cold-storage policy disclosed in plain English. Percentages, key management, and incident history.

• Clear, honest fees

  • Published maker/taker fees and funding/withdrawal fees with dates of last update.
  • No hidden spreads. Try a tiny test trade and compare to mid-market. If a “zero fee” buy is 0.8% off mid, that’s your real fee.
  • GBP specifics: watch FX and card processing markups. Faster Payments should be cheap or free.

• User support and transparency

  • Real-time status page with incident history, not a marketing blog. Example format: status.kraken.com
  • Response-time commitments, not “we’ll get back to you.”
  • Clear complaint handling and ombudsman/ADR info for UK users.

• Marketing that respects rules

  • Plain risk warnings on every promo. The FCA is strict on this since 2023—no “get rich quick” vibes.
  • Educational content over hype. If the blog is all price calls and referral codes, that’s a tone problem.

One stat I keep in mind: year after year, Chainalysis estimates illicit crypto activity is under 1% of on-chain volume. The problem isn’t that “everything is a scam”—it’s that a few bad actors create outsized harm. Good platforms invest early in compliance and security so you never meet those actors.

Red flags I never ignore

• No legal entity or vague T&Cs:

  • If you can’t tell who custodies your assets, who insures them (if anyone), and which law applies, you’re the exit liquidity.

• “Guaranteed” yields or aggressive APYs:

  • Especially on stablecoins. If they promise double-digit returns with no risk, they’re marketing, not managing risk.

• Pressure tactics:

  • Countdown timers to deposit, bonus traps that lock funds, or “team will airdrop if you send first.” Hard pass.

• Telegram-only support:

  • Great for community, terrible for accountability. You want tickets, IDs, and an audit trail.

• Shadow jurisdiction shopping:

  • Constantly moving HQs and licenses to wherever scrutiny is lowest. Stability matters when your money is on the line.

• Promotions that dodge UK rules:

  • Since Oct 2023, UK crypto promos must meet FCA standards. If a platform plays whack-a-mole with websites and apps, assume more corners are being cut.

Banking and on/off-ramps in the UK

In practice, fiat access is where you feel compliance quality most. Solid platforms make deposits and withdrawals boring—in the best way.

• Payment methods to expect:

  • Faster Payments for GBP should be near-instant during banking hours. If you regularly wait >6 hours, ask why.
  • Open Banking partners (e.g., TrueLayer, Plaid) can speed up account linking and reduce errors.
  • CHAPS for larger same-day settlements (often with fees).
  • Card deposits are convenient but usually pricier and sometimes capped.

• Name checks and holds:

  • Expect Confirmation of Payee and name matching. Small mismatches can delay funds—match your legal name exactly.
  • New accounts may face source-of-funds questions for bigger amounts. Legit firms ask; shady ones don’t and then freeze later.

• Travel Rule friction:

  • UK rules require sharing sender/recipient info between providers. You might be asked for a beneficiary name or wallet ownership proof when you withdraw to another platform. Annoying? Yes. But it’s a sign the platform is aligned with the rules you want others to follow too.

• Withdrawal timelines:

  • Faster Payments: typically minutes, sometimes hours outside banking windows.
  • Large first-time withdrawals: 24–72 hours due to enhanced checks. Plan around it; don’t cut it close for bills or salaries.

Bottom line: the more serious the compliance, the smoother your fiat life. If a platform constantly blames “the banks,” it may be their banking relationships—not the entire UK system.

Stablecoins, stable-ish: what to know

Stablecoins live on a spectrum. Some are designed for payments and disclosure; others are designed for vibes. I treat them differently.

• Issuer transparency:

  • Look for regular reserve attestations by a known auditor and a live breakdown of assets. See USDC’s transparency page and Tether’s attestations.
  • Read the fine print on redemption: who can redeem, minimums, and timelines. If only market makers can redeem, you carry extra market risk.

• Design matters:

  • Fully reserved, fiat-backed coins behave differently from algorithmic ones. 2022 taught everyone why.
  • Even fiat-backed coins can de-peg temporarily (remember USDC–SVB). Keep your emergency funds diversified and accessible.

• Regulation-readiness:

  • Watch for how platforms integrate stablecoins with upcoming UK rules on payment-like tokens. If a platform treats stablecoins like a wild-west add-on, expect friction later.

• Operational features:

  • Blacklist/Freeze capability exists for many stablecoins. That can be good for crime control and bad for censorship risk. Choose based on your use case.
  • On-chain liquidity across multiple exchanges is your friend. Thin liquidity = wider spreads when you need speed.

Here’s the ethos I keep: you don’t need to be a regulation buff, you just need to spot who’s prepared for the next 12–24 months. Good actors are already building for it—clear T&Cs, clean audits, stable bank rails, and honest marketing that ages well.

Got questions like “Is crypto even legal here?” or “Do I owe tax on staking?” I’ve collected the quick answers you’ll actually use—want me to show you the short version next?

FAQ: real questions people ask about the UK’s “5 reasons” call for information

What is the “Digital currencies: 5 reasons we’re calling for information” announcement?

It’s the UK government asking the public and industry for evidence on digital currencies—what works, what breaks, and where guardrails are needed. Think of it as a research-and-listen phase that helps shape rules and priorities. It’s not a ban or stealth crackdown; it’s a signal that the UK wants facts before it writes more policy.

Real-world hint: These calls often foreshadow where rules land. For example, the UK later brought in stricter crypto promotions rules (from October 2023), which forced clearer risk warnings and better onboarding journeys. A few brands even paused new UK sign-ups or features while they adapted—proof that these early signals matter.

Is crypto legal in the UK? Do I need to pay tax?

Yes, crypto is legal. But it’s regulated in specific ways.

• Regulation: UK crypto businesses that deal with customers usually need FCA registration for anti-money laundering (AML) purposes. Marketing to UK users must follow the FCA’s promotions rules—clear risk warnings, no “get rich quick” language, and fair disclosures.
• Tax: HMRC treats most personal crypto gains as Capital Gains Tax (CGT) events (e.g., selling, swapping, gifting). Some rewards—like certain staking, airdrops, and mining income—can be Income Tax. Keep precise records: dates, amounts, GBP values, fees, wallet/exchange addresses.

Pro tip: The CGT annual exemption is smaller than it used to be, so casual traders can get caught out. Build the habit of exporting CSVs from your exchanges and wallets monthly.

What’s the difference between cryptocurrency and a UK CBDC?

Cryptocurrencies like Bitcoin are open networks with no single issuer, secured by consensus mechanisms and market incentives.

A potential UK CBDC (often called a “digital pound”) would be public money issued by the Bank of England, accessed via regulated intermediaries, with policy controls (e.g., anti-fraud, systemic risk safeguards). It’s not live; the Bank of England and HM Treasury explored design options and privacy frameworks in a multi-year process.

• Learn more: Bank of England: Digital currencies
• The consultation paper (what it could look like): The digital pound: consultation

Short version: Crypto is permissionless and market-driven. A CBDC would be state-issued money designed for reliability, inclusion, and payments efficiency—with a very different governance model.

Will regulation kill innovation or help adoption?

Both outcomes are possible, but the UK is trying to push for the latter. Rules that curb scams and fake ads usually boost mainstream trust—and trust drives adoption. Overreach can chill experimentation, so the details matter.

Two useful signals:

• Consumer trust effects: After the FCA’s promotions regime kicked in (Oct 2023), the UK market shifted: clearer warnings, tighter onboarding, and fewer wild promises. Some firms paused features to comply—frustrating in the short term, but it’s the kind of hygiene mainstream users expect.
• Market depth: According to Chainalysis, the UK remains Western Europe’s largest crypto market by transaction volume, indicating that activity can remain strong alongside stricter rules. See: Geography of Cryptocurrency Report (2023).

Watchlist for balance: How the UK finalises stablecoin rules and what “good” custody looks like will set the tone for both consumer safety and innovation. HM Treasury has laid groundwork to regulate fiat-backed stablecoins used in payments, with the FCA and Bank of England set to split responsibilities for different risks.

How can businesses comply without killing UX?

I’ve seen teams turn compliance into a competitive advantage with a few smart moves:

• Progressive KYC: Start with light ID checks, then step up verification for higher limits or risk. Be transparent about why you ask for data, and how you secure it.
• Travel Rule readiness: The UK requires sharing sender/recipient info for eligible crypto transfers. Have a plan for missing data from certain jurisdictions. Official note: Cryptoasset transfers: Travel Rule.
• Custody segregation: Keep client assets legally separated, with clear who-owns-what records. Publish how you safeguard private keys and what happens in an insolvency event.
• Plain-language promotions: The FCA cares about “fair, clear, not misleading.” Use real numbers, real risks, no hype. If a feature is experimental or changing, say so.
• Security posture: Aim for SOC 2/ISO 27001, bug bounties, and incident response runbooks. Share a summary of your controls publicly—trust compounds when users can verify.

Example: When the promotions rules landed, some providers temporarily paused features (PayPal did this for UK crypto buys in 2023) and returned with compliant flows. That’s better than winging it and facing forced shutdowns. Source: PayPal UK crypto pause notice.

Did the government ban anything here?

No. A call for information is about learning, not banning. Later, some rules might tighten risky practices (e.g., misleading ads, unregistered promotions), but that’s not a prohibition on crypto. It’s a push toward safer, clearer participation.

“Strong rules don’t have to be anti-crypto. They can be anti-chaos.”

How do I keep up with changes?

I bookmark (and actually read) the following:

• HM Treasury — policy direction and consultations
• FCA: Cryptoassets hub — registrations, promotions, consumer warnings
• Bank of England: Digital currencies — CBDC and systemic stablecoin oversight
• HMRC: Crypto tax guidance — records, CGT, income treatment
• Your exchange’s status page and policy blog — they’ll announce feature changes fast when rules shift

Shortcut: If an app suddenly adds risk warnings, tweaks bonuses, or changes how you buy stablecoins, that’s your early indicator that regulation is moving. Don’t ignore those banners.

Quick recap I give friends who ask me about the UK scene

• Yes, crypto is legal. No, this announcement wasn’t a ban.
• Keep records; HMRC expects clean data for CGT/Income Tax.
• Expect stronger promotions rules and clearer custody standards.
• Stablecoin rules are coming into focus—great for payments if done right.
• Follow official sources; don’t rely on headlines alone.

Want a simple action plan you can finish this week—platform picks, record-keeping, KYC and custody tweaks—without drowning in policy PDFs? I’ve got you. Keep reading next.

Next steps: stay informed, stay safe, and keep building

Policy noise comes and goes. What sticks are your habits. Here’s a tight plan for the week ahead to protect your funds, keep your options open, and stay on the right side of fast-moving UK rules—without turning it into a full-time job.

Quick action plan

• Check your platforms (takes 10 minutes):

  • Search the FCA Register for the exchange or custodian you use. Look for “Registered under the Money Laundering Regulations.”
  • If they run UK-facing ads or promos, they must follow the FCA crypto promotions rules (no “get rich quick,” clear risk warnings). Non-compliant marketing is a red flag.
  • Skim their status page and security blog. Have they published proof of reserves (with an independent auditor) and a clear client asset segregation policy?

• Lock down security (15 minutes):

  • Turn on hardware-key 2FA or passkeys for your exchange and email. Google’s research shows security keys stop phishing-based account takeovers far more effectively than SMS codes.
  • Set withdrawal whitelists and enable withdrawal delays for new addresses.
  • If you self-custody, store your seed phrase offline, consider a metal backup, and do a small “recovery drill” to make sure you can restore.

• Fix your records before tax season sneaks up (20–30 minutes):

  • Export CSVs from every exchange/wallet you use. Label transfers between your own wallets so they’re not misread as disposals.
  • Review HMRC’s guide on Cryptoassets for individuals and the HMRC Cryptoassets Manual for how gains and some rewards can be taxed.
  • Pick a tracking tool and stick with it. Consistency beats perfection.

• Stablecoin hygiene (5–10 minutes):

  • Prefer fiat‑backed coins with frequent attestation of reserves. Read the most recent assurance report before parking large balances.
  • Diversify operational risk: keep working capital in more than one stablecoin and always have a route back to GBP.
  • Set price alerts. Remember how fast depegs can happen—I still keep a tiny “canary” order at 0.97 and 1.03 to ping me if things wobble.

• Test your off-ramps (10 minutes):

  • Do a £5 test withdrawal to your UK bank via Faster Payments. Note speed and any friction.
  • Have a backup ramp. Some UK banks still limit crypto transfers; a second account or a different PSP can save you stress.

• Builders: pre-empt the compliance asks now (30–60 minutes):

  • Map your user flows against the FCA’s promotions regime and add clear risk warnings. Pre-approve copy so your team doesn’t “freestyle” on socials.
  • Refresh your KYC/AML policy to reflect the Travel Rule and suspicious activity reporting. Decide which data you collect and why.
  • Run a one-hour incident tabletop: exchange downtime, depeg, or custodian failure. Who communicates what, when?

Good actors win when rules get clear. Bad actors hate paper trails and user education.

One encouraging sign: independent data keeps showing that better controls and awareness reduce harm. Chainalysis’ latest trend reports suggest illicit crypto volumes are a shrinking share of total activity over time, even as enforcement gets sharper. That’s exactly the direction we want if we care about mainstream adoption.

Where to watch for updates

• HM Treasury: crypto policy and consultations

  • Announcements and policy
  • Policy papers and consultations (search “cryptoassets” or “stablecoins”)

• FCA: registrations, promotions, warnings

  • Cryptoassets hub
  • Registered firms
  • Financial promotions rules
  • Warnings list

• Bank of England: payments, stablecoins, potential digital pound

  • Digital currencies research
  • The digital pound (CBDC)

• Advertising Standards Authority (ASA): crypto ad rulings and guidance

  • Cryptoassets guidance

• HMRC: the tax angle you actually need

  • Cryptoassets for individuals

• My running feed:

  • Cryptolinks News — curated updates without the fluff

My take

This is the calm before the constructive part. A call for information isn’t a crackdown—it’s a chance to shape smarter rules that reward builders who protect users and tell the truth. If we tighten security, keep clean records, use compliant platforms, and insist on clear stablecoin disclosures, we’ll be ready for the next phase.

I’ll keep tracking the important bits on cryptolinks.com so you get the signal without the noise. If you learn one thing this week, let it be this: small, boring habits beat big promises every time. Keep going, keep safe, and keep building.