Arjun Sethi, the co-CEO of major crypto exchange Kraken, has voiced strong criticism regarding the United Kingdom’s current cryptocurrency regulations, asserting that they impede the company’s ability to provide optimal services to its customers.
In a recent interview with the Financial Times, Sethi likened the experience of visiting a crypto website in the UK, including Kraken’s, to encountering disclaimers akin to those on cigarette packaging. He suggested that these extensive disclaimers significantly detract from the overall customer experience.
Sethi explained that these disclosures tend to slow down users. Given the inherent speed required in cryptocurrency trading, he argued that such delays are detrimental to customers. He concluded that while disclosures are important, implementing them through an excessive number of steps, such as fourteen, ultimately proves to be counterproductive.
The UK Financial Conduct Authority’s (FCA) updated financial promotion regime, which became effective in October 2023, introduced several new requirements. These include a mandatory “cooling-off” period for individuals engaging with crypto for the first time and a requirement for firms to assess a user's knowledge and experience before allowing them to trade.
Sethi expressed concern that these stringent rules might discourage customers from investing in crypto altogether, potentially causing them to miss out on significant potential gains. The FCA, however, defended its regulations, stating that they are functioning as intended by enabling some consumers to make an informed decision that crypto investment may not be suitable for them.
The UK's Evolving Stance on Cryptocurrency
Despite the current regulatory frustrations highlighted by Kraken, the United Kingdom appears to be gradually aligning its approach to digital-asset oversight with that of the United States.
Lisa Cameron, a former United Kingdom Member of Parliament and founder of the UK-US Crypto Alliance, indicated her belief that a joint “sandbox” initiative between the UK and the US is in development. This initiative aims to harmonize their respective crypto markets.
Cameron's assessment stems from discussions with US Senators and regulators. She anticipates that the sandbox’s primary objective will be to address issues related to the passporting of crypto licenses between the two nations.
In a related development, the Bank of England published a consultation paper on Monday outlining proposed regulatory frameworks for stablecoins. The new legislation is specifically focused on sterling-denominated “systemic stablecoins” that are widely utilized in payment systems, drawing parallels with the US’s GENIUS Act.
UK and US Collaboration on Crypto Regulation
The ongoing collaboration between the UK and the US on cryptocurrency matters is not a recent development. Reports from September indicated that treasury authorities in both countries had established a transatlantic task force dedicated to exploring “short-to-medium term collaboration on digital assets.”
Furthermore, in September, UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent engaged in discussions concerning how both nations could strengthen their coordination on cryptocurrency-related issues.
Also in September, UK trade groups urged the UK government to integrate blockchain technology into a technology collaboration initiative with the US known as “Tech Bridge.” These organizations issued a joint letter warning that excluding digital assets from the UK-US Tech Bridge would represent a missed opportunity and risked leaving Britain in a subordinate position.