The recently elected Labour government is facing a significant delay in enacting new crypto regulations, which could extend until 2025, according to Gillian Lynch, Head of Europe and Ireland at Gemini.
This comes after the Conservative government’s efforts to establish new laws over the summer were interrupted by a snap election.
While some in the crypto industry worry that the delay may push businesses to more stable regulatory environments, such as the EU, Lynch views the postponement as beneficial.
“If we end up with a well-considered piece of regulation in 12 to 18 months, that’s OK,” she said.
However, some crypto lobbyists have voiced concerns that the UK’s lag could disadvantage the country as the EU moves forward with its comprehensive Markets in Crypto-Assets (MiCA) regulation.
MiCA, which is set to become effective for stablecoins, exchanges, wallets, and other crypto service providers by the end of this year, establishes one of the world’s most complete regulatory frameworks for digital assets.
In contrast, the UK’s Financial Conduct Authority (FCA) is still fine-tuning its crypto regulation details, which are based on proposals the Treasury released in October 2023.
Prior to the snap election, former Financial Services Minister Bim Afolami indicated that new regulations would likely be in place by mid-2024. However, Lynch cautions that the shift in government may further delay the UK’s crypto regulatory framework rollout.
“Any change in government often slows down the implementation of a regulatory regime,” Lynch explained. “With a new administration at the helm, it could take at least another 12 months to fully establish new regulations.”
The EU’s MiCA framework is expected to influence the global regulatory landscape, and UK policymakers are closely watching its outcomes to identify potential areas for refinement.
Lynch noted that “MiCA II” is already under discussion within policy circles, aiming to fill in regulatory gaps and address challenges identified in the initial rollout.
Meanwhile, the FCA has proactively implemented rules on how financial firms market to UK crypto businesses. These stringent requirements recently led companies like PayPal and Binance to pause UK services, drawing both support and criticism.
Lynch acknowledged the difficulty of compliance but emphasised that “regulatory standards are what consumers expect from responsible businesses.”
A survey by Gemini, which sampled 6,000 people across major markets including the UK and the US, found that nearly 40% of respondents who do not own crypto cite regulatory concerns as a primary deterrent.
Despite the delay, Lynch argues that a slower, more calculated approach could ultimately benefit the UK’s crypto sector, as policymakers draw insights from MiCA’s implementation and adjust accordingly
