As new technologies emerge, governments often face the challenge of deciding whether to ban or regulate them. When it comes to cryptocurrencies, regulation—not prohibition—is the smarter path forward.
Regulation helps bring clarity, security, and structure to industries that operate in grey areas, such as crypto trading or cannabis use. Fortunately, many governments, including the UK, are moving toward regulating cryptocurrencies rather than banning them. This is a positive step, especially as digital assets become more mainstream.
If you’re interested in trading crypto, it’s wise to use a trusted platform such as Thorenext, which complies with regulations and prioritizes user safety.
Why Governments Must Act Now
Cryptocurrencies and blockchain technology are not passing trends—they are here to stay. That’s why governments need to act quickly and introduce thoughtful regulations that protect users without stifling innovation.
Here are six practical steps the UK government can take to achieve that balance:
1. Clarify the Tax Rules
Cryptocurrencies are typically exchanged for fiat currencies like the US dollar or British pound. These exchanges often result in profits, which should be taxed appropriately.
The United States set a good example in 2018 by confirming that even crypto-to-crypto transactions are taxable. Similarly, the UK’s tax authority (HMRC) should clearly outline how different crypto activities—such as trading, staking, mining, and airdrops—are taxed. This will help users avoid confusion and ensure fair tax reporting.
2. Regulate Crypto Exchanges
Just as traditional currencies flow through licensed banks and money changers, crypto transactions should go through regulated exchanges. Whether you’re a casual investor or a full-time trader, all your transactions should be processed through platforms that follow financial laws.
This approach will:
- Help prevent illegal activity
- Make tax collection easier
- Provide stronger protection for users
However, to support this shift, banks must also begin offering services like crypto-friendly accounts.
3. Set Up a Clear Framework for ICOs
Initial Coin Offerings (ICOs) are a way for crypto projects to raise money by selling their tokens. While some ICOs are legitimate, many lack transparency, making it hard for investors to know where their money is going.
A proper regulatory framework should:
- Verify the team behind the project
- Ensure the product or service actually exists
- Check the whitepaper for accuracy and plagiarism
- Provide clear information about how the funds will be used
When done right, ICOs can support real innovation in a decentralized world.
4. Let Exchanges Oversee ICO Listings
Allowing cryptocurrency exchanges to vet and list ICOs comes with two major benefits:
- Exchanges gain a new revenue stream
- ICOs face higher standards before reaching investors
The government should require exchanges to conduct background checks, technical reviews, and legal audits before listing any ICO. This will reduce the risk of scams and protect investor interests.
5. Create a Committee of Experts
Regulating a fast-evolving space like blockchain requires more than just financial knowledge. It also involves understanding technology, economics, security, and decentralized governance.
The UK should form a working group of:
- Economists
- Technology experts
- Blockchain professionals
- Policymakers
This group should publish a detailed report with clear guidelines, helping developers, investors, and institutions navigate the crypto space with confidence.
6. Don’t Reinvent the Wheel
Blockchain is still a niche skillset. As investor and entrepreneur Naval Ravikant noted, only a small number of people worldwide truly understand how to build secure, scalable blockchain systems.
Instead of trying to build everything from scratch, the UK should collaborate with global leaders, adopt proven international standards, and learn from successful platforms like CoinList or Bitcoin Smart, which offer secure and compliant crypto trading experiences.
Conclusion
Cryptocurrencies challenge traditional financial systems because they operate beyond national borders and don’t fit neatly into existing categories. This creates uncertainty for investors, developers, and regulators alike.
But banning crypto is not the answer. Regulation—when done right—offers a path forward that protects consumers, reduces risks, and supports innovation.
As digital finance continues to grow, smart regulation will be the key to unlocking its full potential for the UK and beyond.
