Kraken Co-CEO Warns UK Crypto Rules “Punish” Users Instead of Protecting Them

Kraken co-CEO Arjun Sethi has sharply criticized the United Kingdom’s latest crypto regulations, accusing UK regulators of deliberately harming the crypto market through its unnecessary regulations which is creating barriers for users to buy or trade digital assets.

In an interview with the Financial Times, Sethi likened the UK’s mandatory disclaimers to the warning on a cigarette pack, claiming that they clutter the user experience and undermine accessibility.

“In the UK today, if you go to any crypto website, including Kraken’s, you see the equivalent of a cigarette box. Disclosures are important — but if there are 14 steps before you can make a purchase, it’s worse for customers.”

According to Sethi, the new rules—requiring multiple verifications and extensive disclaimers—slow users down and discourage trading activity.

“Speed matters in crypto. If you slow people down too much, you’re punishing the very users you’re trying to protect.”

Uk Taking Careful Steps Into Crypto, Partnering With The U.S.

The UK’s Financial Conduct Authority (FCA) rolled out its new financial promotion regime in October 2023, significantly tightening the oversight of crypto platforms. The regulation enforces a “cooling-off” period for first-time crypto investors and requires exchanges to assess whether users possess sufficient understanding of the risks involved before they can trade.

The FCA said the measures are designed to prevent inexperienced investors from making uninformed or risky decisions in a volatile market. A spokesperson for the regulator told the Financial Times that “some consumers may make an informed decision that investing in crypto is not right for them — that is our rules working as intended.”

However, industry leaders like Sethi argue that such well-meaning measures may go too far. By creating layers of friction, they warn, regulators risk alienating retail investors and discouraging participation in the broader digital-asset economy.

Sethi said, warning that the approach could result in missed opportunities for those looking to responsibly explore the market

“These rules may lead users to avoid investing in crypto entirely.”

While the UK’s regulatory tightening has frustrated industry players, policymakers maintain that these moves are part of a broader effort to establish a safer, more mature crypto market. The government’s long-term goal, according to observers, is to make Britain a credible global hub for digital finance — but one where investor safeguards remain strong.

To achieve this, the UK is partnering with the U.S by exploring a joint "sandbox" — a cross-border testing environment that would align regulatory standards and make it easier for crypto firms to operate in both markets.

Through the sandbox, UK hope to “iron out some of the complexities around passporting and licensing” for crypto exchanges seeking compliance on both sides of the Atlantic. The initiative reflects growing cooperation between the UK and US on digital-asset oversight.

On Monday, the Bank of England recently published a consultation paper proposing a regulatory framework for sterling-denominated “systemic stablecoins,” signaling London’s growing interest in digital payments infrastructure.

The proposal parallels similar legislative efforts in the United States, such as the GENIUS Act, which seeks to bring stablecoins under formal financial regulation.

A Divided Industry

Industry reaction to the FCA’s stricter stance has been mixed. Some exchanges, including Kraken, warn that burdensome regulation could push innovation offshore and limit access for everyday investors. Others, however, believe stronger compliance could enhance public trust in crypto and pave the way for institutional adoption.

The debate reflects a broader question that regulators worldwide are grappling with: how to protect investors without choking innovation.

While Sethi’s frustration over excessive steps and disclaimers resonates with many in the industry, the FCA’s cautious approach stems from hard-learned lessons during periods of extreme volatility and fraud. Ensuring that users truly understand what they’re buying, the regulator argues, is not about obstruction — but education.

Ultimately, both perspectives hold merit. The crypto industry needs regulatory clarity that encourages growth and trust, while regulators must avoid policies that make adoption impractical. Striking this balance — between speed and safety — will determine whether the UK emerges as a leader in digital assets or risks watching innovation move elsewhere.