🇬🇧 UK Law Boosts Crypto Investor Protection — But Liquidity Risks Loom

UK lawmakers have strengthened crypto investor protection in bankruptcy cases, clearly defining digital asset ownership in court. However, a newly proposed conservative reserve rule could strain liquidity and squeeze profits for crypto firms.

• New UK law legally recognizes crypto as property, improving recovery rights in bankruptcies

• Investors gain clearer ownership claims if exchanges or custodians collapse

• Strict reserve and capital requirements may lock up funds, reducing market liquidity

While legal clarity boosts long-term trust, overly conservative reserve rules could limit liquidity and innovation, especially for exchanges and stablecoin issuers.

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