While many countries are still figuring out how to handle cryptocurrency, the UK has taken a particularly strict approach that’s causing some major pushback from industry players. Kraken, one of the world’s biggest crypto exchanges, is leading the charge against what they see as overly harsh rules that are hurting British innovation.
Arjun Sethi, a top executive at Kraken, didn’t mince words when describing UK crypto regulations as “too stringent.” The numbers tell a pretty stark story – about 75% of crypto products are completely blocked from regular customers under current UK rules. That includes popular services like DeFi platforms, staking rewards, and crypto lending. It’s like having a candy store where three-quarters of the shelves are off-limits to shoppers.
Three-quarters of crypto products are banned from UK customers – like a candy store with most shelves off-limits to shoppers.
The regulatory hurdles create what Sethi calls “friction” that slows everything down. When people want to buy crypto or businesses try to offer new services, they hit walls of paperwork and complex requirements. UK rules force crypto companies to plaster their websites with extensive risk warnings and make customers fill out lengthy questionnaires. Sethi compared these warnings to the scary messages on cigarette boxes – designed more to scare people away than actually protect them.
This strict approach is having real consequences. Some crypto platforms are pulling back their UK offerings or leaving the market entirely. Others are desperately searching for authorized ways to keep serving British customers. The FCA has intensified its oversight with legal proceedings against major exchanges like HTX for illicit promotional activities. The result? Slower adoption rates and fewer innovative products reaching UK consumers.
Despite the challenges, Kraken isn’t giving up on Britain. The company recently secured an Electronic Money Institution license in March 2025, which should make deposits and withdrawals faster while improving relationships with UK banks. They’re also growing their UK workforce and expanding their product range where regulations allow. Major regulatory protections similar to those seen in traditional currency trading platforms ensure oversight across financial markets. About 12% of UK adults now own or have owned cryptocurrency, demonstrating significant market interest despite regulatory constraints.
The UK government plans to finalize new crypto legislation by the end of 2025, bringing even more traditional financial oversight to the industry. While consumer protection is important, many worry that Britain’s cautious approach might push innovation and investment to more crypto-friendly countries, potentially leaving UK innovators behind in the global digital asset race.
