Kraken Co-CEO Warns UK Crypto Rules Could Stifle Retail Access
In the fast-paced world of cryptocurrency trading, where prices can swing wildly in minutes, every second counts for retail investors chasing opportunities. But what happens when regulatory hurdles slow them down just enough to miss the boat? This question lies at the heart of recent criticisms leveled against the UK’s financial oversight body by a prominent industry voice. Arjun Sethi, co-CEO of major cryptocurrency exchange Kraken, has publicly challenged the UK’s strict rules on promoting digital assets, arguing that they inadvertently harm everyday investors. In an interview with the Financial Times, Sethi highlighted how mandatory risk warnings and pre-trade questionnaires—designed to protect consumers—end up creating friction in a market that demands speed. “In the U.K. today… you see the equivalent to a cigarette box [warning] — ‘use this and you’re going to die,’” Sethi remarked, underscoring the blunt, cautionary tone of the disclosures required on crypto platforms, including Kraken’s own site. These regulations, enforced by the Financial Conduct Authority (FCA), require crypto firms to display prominent risk alerts and compel users to complete questionnaires confirming their understanding of potential losses before buying assets. While intended to shield novice investors from the volatility of cryptocurrencies, Sethi contends that the process adds unnecessary steps—up to 14 in some cases—that delay transactions at critical moments. “Because of the speed at which they have to do the transaction, it’s worse for consumers. Disclosures are important… but if there are 14 steps, it’s worse,” he explained, pointing to how time-sensitive trades could slip away as prices fluctuate.
A History of Caution in UK Crypto Regulation
The UK’s approach to crypto oversight has long been characterized by a conservative stance, shaped by broader concerns over financial stability and consumer protection following high-profile crypto scandals like the 2018 collapse of platforms amid the ICO boom. The FCA, established in 2013 to regulate financial services post the 2008 global crisis, has extended its scrutiny to digital assets since 2020, classifying them as high-risk and imposing rules akin to those for traditional investments. This cautious framework stems from the FCA’s mandate to prevent market abuse and ensure fair treatment, but critics argue it treats crypto more like a speculative gamble than an innovative asset class. Sethi’s comments echo ongoing industry frustration; for instance, in September 2025, FCA executive director for payments and digital finance David Geale indicated the regulator might ease some requirements, such as eliminating mandatory cooling-off periods for crypto purchases. Such periods, standard for high-risk investments, could lock users out of rebounding markets, exacerbating losses in crypto’s 24/7 trading environment.
- Key Regulatory Elements: Firms must categorize crypto as “restricted mass market investments,” barring general promotions unless users pass an appropriateness test. This includes detailed risk warnings about potential total loss of capital.
- Impact on Retail Investors: Questionnaires assess knowledge of crypto’s volatility, but in a sector where opportunities arise and vanish rapidly, delays from compliance can mean missing price surges or dips.
- Broader Context: The rules align with the UK’s post-Brexit financial reforms, aiming to align crypto with global standards like those from the EU’s MiCA framework, but they’ve drawn fire from exchanges for potentially driving users to less-regulated offshore platforms.
Despite these measures, the FCA has faced backlash for being overly paternalistic, with some industry observers noting that while protecting vulnerable investors is crucial, the barriers might disproportionately affect informed retail participants eager to engage.
Balancing Innovation and Protection
The debate highlights a tension in global crypto regulation: how to foster innovation without exposing users to undue risk. In the UK, where crypto adoption has grown steadily—reaching over 10 million users by mid-2025—these rules have stabilized the market by weeding out bad actors but may also limit accessibility for everyday traders. Sethi’s critique underscores a societal ripple effect: by slowing entry, regulations could widen the gap between institutional players with sophisticated tools and retail investors reliant on quick decisions. As the FCA considers waivers, such as for cooling-off periods, the focus remains on evolving rules that adapt to crypto’s unique dynamics without stifling growth. Kraken, a U.S.-based exchange with significant UK operations, has not yet responded to requests for further comment, but Sethi’s remarks signal a push for more agile oversight amid a maturing industry. How do you think these regulatory hurdles impact everyday crypto users in the UK—do they provide necessary safeguards or hinder participation in a global market?
