Co-CEO of the cryptocurrency exchange Kraken, Arjun Sethi, has sharply criticized the UK’s approach to regulating digital assets. In his view, the new requirements from the local Financial Conduct Authority (FCA) significantly complicate the transaction process, hinder industry development, and deter retail investors.
This is reported by Finway
Strict Restrictions and Their Impact on Users
According to Sethi, the current FCA rules require crypto companies to display prominent risk warnings on their platforms, prohibit any bonuses or incentives for investing, and mandate a risk comprehension test. Additionally, so-called “positive barriers” have been introduced: these measures slow down the purchasing process to ensure users can understand the potential consequences of their actions.
Arjun Sethi emphasized that such restrictions negatively affect the experience of Kraken users in the UK, as they lack access to about 75% of the products available to clients in the US. In particular, UK clients cannot utilize yield-generating services or participate in DeFi protocols.
“In the UK today, if you visit any cryptocurrency website, including Kraken, you see a warning equivalent to that on a pack of cigarettes — ‘use this and you will die,'” Sethi said.
He also stressed that excessive regulation only worsens the situation for users, as the transaction process becomes overly complicated and lengthy.
Response from the UK Regulator and Future Changes
The FCA explained that the main goal of the new rules is to protect investors, not to block their activities. The regulator claims that testing is only suitable for initial verification and is not required for every transaction. Thus, these measures, according to the FCA, do not create significant obstacles for clients.
At the same time, the UK regulator has faced criticism for its overly cautious approach to the crypto market, especially compared to the more liberal stance of the US under Donald Trump’s administration. Last month, the FCA filed its first lawsuit against the HTX exchange, linked to billionaire Justin Sun, for violating financial promotion rules.
Starting January 1, 2026, new requirements for crypto companies will come into effect in the UK: they will be required to report to tax authorities about every user and every transaction. Additionally, the Bank of England and the FCA are working on a new regulatory framework for stablecoins, set to launch in 2026. Regulators have already announced their intention to ease restrictions for businesses and exchanges, acknowledging that excessive rigidity in rules may stifle innovation.