The UK government is renewing efforts to establish Britain as a global hub for cryptocurrency and blockchain innovation. However, it faces significant challenges, including competition from the U.S. and skepticism from local entrepreneurs about the nation’s regulatory and business environment. With plans to create a supportive framework for digital assets, the UK is looking to position itself as a leader in the burgeoning crypto sector.
Economic Secretary to the Treasury, Tulip Siddiq, recently outlined the government’s plans to engage businesses in developing draft legislation for digital assets, including stablecoins—cryptocurrencies pegged to fiat currencies. Speaking at an industry event, Siddiq reassured stakeholders that crypto staking services, which offer rewards on token holdings, will not be classified as collective investment schemes, sparing them from heavy regulatory burdens.
“This is a sector with enormous potential and one that already plays a central role in the UK’s vibrant tech landscape,” said Poppy Gustafsson, Britain’s investment minister, during an event hosted by Coinbase-backed advocacy group Stand With Crypto. She highlighted initiatives such as the Digital Securities Sandbox and the “digital gilt” pilot for issuing government bonds on the blockchain as examples of the UK’s commitment to fostering blockchain innovation.
Despite these steps, doubts persist about Britain’s ability to become a global crypto leader. Entrepreneur Steven Bartlett, host of the “Diary of a CEO” podcast, expressed concerns about the UK’s regulatory clarity and pro-entrepreneurship attitude.
Comparing his experiences working in London and San Francisco, Bartlett argued that the UK’s restrictive environment makes it harder to build blockchain businesses.
The Financial Conduct Authority (FCA) is working on a roadmap for crypto regulation, with plans to introduce rules on stablecoins, trading platforms, and staking by 2026.
While the framework aims to provide clarity, industry leaders worry that the timeline could put Britain behind other regions, such as the EU, which is rolling out its Markets in Crypto-Assets (MiCA) regulation this month, and the U.S., which is moving swiftly toward federal crypto legislation.
George McDonaugh, CEO of blockchain investment firm KR1, criticized outdated UK regulations, including a 2018 rule preventing tokens like Bitcoin and Ethereum from being included in publicly listed investment vehicles. “Removing this restriction could unlock a tsunami of capital into British markets,” McDonaugh argued, adding that modernization is critical for the UK to compete globally.
Irfan Baluch, a crypto lawyer at Cripps, also called for regulatory reform, urging the FCA to adopt forward-thinking policies that encourage innovation rather than stifling it. He pointed to the EU’s MiCA framework as a potential model for balancing oversight with growth.
The UK has a unique opportunity to act decisively in fostering blockchain and crypto technologies, Bartlett said. “If we can implement radical policies like the U.S., we could ensure that the value generated by these technologies benefits this country. But it has to be bold.”
