Kraken co-CEO Arjun Sethi has criticized the United Kingdom’s cryptocurrency regulations, arguing that the regulations have turned investor protection measures into excessive barriers and obstacles that affect market access and trades.

In a recent interview, Sethi compared the rules to “cigarette box”-style warnings that scream “use this and you’re going to die,” thus slowing transactions in a market where speed is extremely important and potentially locking users out of innovation altogether.

The comments come as the Financial Conduct Authority (FCA) continues to propose stricter regulatory oversight.

“You’ll Miss Out on Gains” Says Kraken Boss on Timing and Regulation

The FCA’s financial promotion regime, implemented in October 2023 and updated throughout 2025 with an increased layer of protection.

Now, platforms like Kraken have to display risk disclaimers on their websites and applications, develop knowledge assessments for new users, and even apply self-categorization questionnaires to judge levels of experience. Returning clients must also complete similar checks to avoid service disruptions.

Sethi said in his interview that the process involves up to “14 steps,” delaying transactions in a sector where volatility can increase or decrease transaction value in minutes. He warned that these new regulations would not only frustrate users but could deter them from investing, causing them to “miss out on gains” in a sector where timing is everything.

Kraken restricts users in the United Kingdom from roughly 75% of products available to its users in the United States, including DeFi staking, lending, and yield-generating features, Sethi confirmed.

Traders in the United Kingdom have also taken to social media platforms to express their concern and complaints about account suspensions after declaring modest Bitcoin allocations and prolonged deposit holds due to compliance reviews.

The exchange has secured an Electronic Money Institution (EMI) license from the FCA in March 2025, allowing faster GBP on-ramps and bank integrations. In another case, the regulator sued exchange HTX on October 22, 2025, for unauthorized and illegal promotions, a testament to the strict enforcement and zero tolerance for non-compliant messaging.

Sethi acknowledged the need for disclosures; he also warned that overreach risks “driving innovation offshore.” A stand that is strongly supported by the former Chancellor George Osborne, who in August said the United Kingdom had “allowed ourselves to be left behind” as the United States and the European Union continue to innovate and adopt stances that allow them to move forward.

FCA Defends Framework, Points to 2025 Adjustments

The FCA remains unapologetic, referring to its regulations as conscious design. “Some consumers might make an informed decision that investing in crypto is not right for them—that is our rules working as intended,” the regulator’s spokesperson told Sethi.

In September, Executive Director David Geale made similar remarks: “Waivers from specific obligations—for example, bypassing cooling-off periods for crypto purchases due to price volatility—can occur, but only when the risks are appropriately aligned.”

FCA’s Regulatory activity in 2025 has included:

April–May: Draft legislation expanding oversight to stablecoins and custody; consultations closed in May.
May: Consultation papers CP25/14 and CP25/15 mandating full liquid-asset backing for stablecoin issuers and enhanced custody safeguards.
June: Proposal to lift the retail ban on crypto exchange-traded notes (ETNs), effective October 8.
July: Final policy statements PS25/9 and PS25/10, setting January 19, 2026, as the enforcement date for promotion rules.

These regulations are in line with what other leading nations are adopting globally. The United Kingdom’s regime is in line with the activity-based regulation of the European Union’s MiCA, effective December 2024, while Chancellor Rachel Reeves pledged United States collaboration for “responsible” digital asset rules.

However, critics like Sethi argue the speed only favors caution over clarity, with AML registration backlogs leaving many companies stuck.

Britain Leads Global Crypto Ownership, But at What Cost?

Gemini’s 2025 crypto ownership survey reveals that the United Kingdom is at 24%, ahead of the United States, which is at 22%, a growth that was majorly driven by increased blockchain adoption.

Yet post-FTX consumer protection remains a priority, with the FCA forming a September task force with the United States to explore cross-border sandboxes for licensing, while Bank of England consultations on sterling stablecoins reference the GENIUS Act’s payment-focused approach.