The British government is poised to unveil its long-awaited cryptocurrency regulation plans this month, aiming to reassure firms and prevent a talent drain to the United States.
The initiative comes as Donald Trump’s pro-crypto policies attract industry attention and investment across the Atlantic.
According to sources familiar with the plans, the UK Treasury is preparing two key pieces of legislation.
One will focus on stablecoins—digital tokens pegged to less volatile assets like the US dollar—while the other will address requests from crypto providers to exclude staking services from existing financial regulations.
Competing with Trump’s Pro-Crypto Policies
The regulatory push comes against the backdrop of Trump’s election victory in the US, which has energised the cryptocurrency sector.
Trump has vowed to transform the US into a global crypto hub, pledging to fire US Securities and Exchange Commission Chair Gary Gensler, establish a government-owned Bitcoin reserve, and mandate domestic mining of future Bitcoin.
The UK risks losing startups to jurisdictions with clearer or more favourable rules, such as the US or the EU.
Bitcoin and other digital assets have surged following Trump’s win, adding urgency to the UK’s plans.
Delayed Legislation Under Labour
The legislative framework, initially proposed under former Prime Minister Rishi Sunak, was delayed after the Conservative government’s defeat in the July general election.
Sunak had promised in 2022 to position the UK as a global leader in digital assets, but the transition to Keir Starmer’s Labour administration temporarily stalled the initiative.
The Financial Conduct Authority (FCA) is expected to release a roadmap for crypto regulation soon, including a consultation on stablecoins in early 2024. This will be followed by a phased rollout of broader cryptocurrency regulations.
Industry Concerns Over UK Progress
While the FCA and the Bank of England have been advancing a digital securities sandbox for blockchain experimentation, the lack of regulatory clarity has left crypto companies hesitant to invest in the UK.
Industry executives and lobby groups have expressed concerns, particularly as the European Union’s Markets in Cryptoassets (MiCA) regulation is set to take full effect by the end of the year.
“The UK has a real opportunity to capitalise on a second-mover advantage, but only if it can mobilise,” said Laura Navaratnam, UK policy lead at the Crypto Council for Innovation.
Roadmap to 2024
The Treasury had previously committed to offering greater clarity on crypto regulation by 2024, following consultations on fiat-backed stablecoins and the passage of the Financial Services and Markets Act in June 2023.
While the timeline remains tight, the upcoming roadmap and new legislation are expected to provide the much-needed direction to solidify the UK’s position as a competitive hub for digital assets.
Whether these efforts will match Trump’s ambitious crypto agenda remains to be seen.
