Arjun Sethi, co-CEO of Kraken, has harshly criticized the current UK crypto regulations. During an interview with the Financial Times, Sethi argued that the current framework, in effect since October 2023, harms customers. He stated that the rules worsen the customer experience instead of protecting them.
Sethi compared the mandatory warnings on websites to “a cigarette box.” He pointed out that these disclosures slow users down. In cryptocurrency trading, speed is crucial, making this friction detrimental. The Kraken co-CEO emphasized that if there are 14 steps, it’s worse for the customer. These rules from the Financial Conduct Authority (FCA) require a cooling-off period for new investors. They also require knowledge assessments before trading.
The central argument is that the UK crypto regulations are counterproductive. Sethi suggests that excessive friction may deter customers from investing. This could lead to users missing potential gains. However, the FCA defended its stance. The authority noted that if a consumer decides not to invest after the warnings, it means the rules are working as intended.
Is the UK Sacrificing Innovation for Regulatory Alignment with the US?
Despite the frustrations expressed by Kraken, the UK appears to be moving toward greater alignment with the United States on digital asset oversight. A joint UK-US “sandbox” is reportedly in development, according to Lisa Cameron, founder of the UK-US Crypto Alliance. Cameron, a former Member of Parliament, reached this conclusion after discussions with US regulators. The purpose of this “sandbox” would be to streamline crypto licenses between both nations.
Likewise, the Bank of England recently published a consultation paper. It proposes a regulatory framework for stablecoins. This new legislative approach focuses on sterling-denominated systemic stablecoins used widely in payments, an approach similar to the US GENIUS Act. On the other hand, transatlantic collaboration is not new. Last September, Treasury authorities from both countries created a task force. There were also discussions on strengthening coordination on crypto. Trade groups even urged to include blockchain technology in the “Tech Bridge” program between the nations, warning that excluding digital assets would be a missed opportunity.
