Arjun Sethi, co-CEO of the cryptocurrency exchange Kraken, sharply criticized the UK’s approach to regulating the digital asset market. He emphasized that the current rules imposed by the Financial Conduct Authority (FCA) significantly complicate the work of investors and hinder innovation in the industry.
This is reported by Business • Media
How New Rules Affect Investors and Businesses
According to Sethi, the new regulatory requirements in the UK slow down transactions and deter retail investors. He pointed out that users visiting cryptocurrency sites encounter excessively strict risk warnings, and the investment process is complicated by multi-step verifications and restrictions.
“In the UK today, if you visit any cryptocurrency site, including Kraken, you see a warning equivalent to that on a pack of cigarettes — ‘use this, and you will die,'” said Sethi.
He also noted that excessive regulation significantly worsens the user experience. Specifically, if a transaction requires going through fourteen steps, it demotivates investors and reduces the market’s attractiveness. As a result, UK users of Kraken do not have access to about 75% of the products available to customers in the US, including profit-generating services or the ability to participate in DeFi protocols.
FCA’s Position and Future Regulatory Changes
The FCA explains that strict rules are implemented to protect investors. They require crypto companies to post clear risk warnings on their sites, prohibit any incentives for investing, and mandate passing tests on understanding risks. Additionally, so-called “positive barriers” have been introduced — extra steps that slow down the process of purchasing crypto assets to ensure users are aware of the potential consequences of their actions.
The regulator emphasizes that these measures are not intended to block transactions but are aimed at protecting consumers from reckless investments. An FCA representative highlighted:
“Customers must answer questions before a company can make them a financial offer, but this is not required every time they trade, so it usually does not hinder their actions. Some consumers may make an informed decision that investing in crypto assets is not suitable for them — and that means our rules are working as intended,” said the FCA representative.
The British regulator has been repeatedly accused of excessive caution regarding the crypto market, especially against the backdrop of the gradual liberalization of crypto regulation in the US under Donald Trump. In October, the FCA filed a lawsuit against the HTX exchange, linked to billionaire Justin Sun, for violating financial promotion rules.
Starting January 1, 2026, new requirements will come into effect in the UK, obliging crypto companies to report to tax authorities about each user and all transactions conducted. Meanwhile, the Bank of England and the FCA are preparing an updated regulatory framework for stablecoins, which will also take effect in 2026. Regulators have already agreed to consider the possibility of easing some restrictions for businesses and crypto exchanges, acknowledging that overly strict limits may stifle innovative development in the sector.