UK Risks Falling Behind on Second Crypto Surge, according to Ex-Chancellor
The UK's Crypto Regulatory Landscape: A Work in Progress
The United Kingdom is currently in the midst of establishing a comprehensive and robust regulatory framework for cryptocurrencies and stablecoins. This ambitious plan, aimed at aligning crypto assets with the standards of traditional financial institutions, is expected to be fully implemented by mid-2026.
The Financial Conduct Authority (FCA), the UK's financial regulatory body, has been leading the charge. Last week, they announced plans to lift restrictions on crypto exchange-traded notes (cETNs) for retail investors, starting in October. The FCA has also released a Discussion Paper on the features of the upcoming crypto regime as part of its crypto roadmap to expand to a more comprehensive regulatory framework.
However, the UK's progress in this area appears to be slower than that of some other financial hubs. Singapore, Hong Kong, and Abu Dhabi have already adopted more comprehensive legislative or regulatory frameworks for crypto asset platforms and stablecoins, moving more swiftly into formal regulation and market facilitation.
George Osborne, the former Chancellor of the Exchequer and a member of Coinbase's advisory council, has been a vocal critic of the current UK government's approach to the crypto industry. He compared the situation to Nigel Lawson's Big Bang in the 1980s, suggesting that other financial capitals, including Singapore, Hong Kong, and Abu Dhabi, are adopting comprehensive legislative frameworks for crypto asset platforms.
Osborne believes that the UK had an opportunity to lead the crypto industry but has done next to nothing since multiple chancellors vowed to support the industry. He urged ministers to embrace innovation and set the long-awaited framework, arguing that the UK is currently being left behind in the crypto industry.
The proposed rules are expected to bring exchanges, dealers, and agents into regulatory limits, crack down "on bad actors while supporting legitimate innovation," and set clear transparency, consumer protection, and operational resilience standards, like traditional financial institutions. However, some of these proposed rules, like requiring sterling stablecoins to be backed only by central bank reserves, may ensure that the UK doesn't lead the sector.
The EU has legislated crypto, and the US has recently signed into law the GENIUS Act to make America "the center of the stablecoin revolution." The HM Treasury has also published a draft and an explainer document detailing the intended policy outcomes of proposed provisions to establish a complete regime for cryptocurrencies.
The FCA has introduced a new set of reporting rules to ensure crypto investors are not deliberately evading taxes. The proposed rules are part of the UK's efforts to create a secure, stable, and comprehensive regulatory regime that tightly aligns crypto firms with standards expected of traditional financial institutions, including prudential requirements, consumer protections, governance, and operational resilience. This regulatory regime seeks to bolster market confidence and encourage innovation while reducing risks of failures and illicit activities.
As the UK's regulatory framework for crypto assets and stablecoins moves forward, it remains to be seen whether the country can catch up to the pace set by Singapore, Hong Kong, and Abu Dhabi. The FCA is actively engaging the industry through consultations that close in late 2025, and the framework will cover stablecoin issuance, custody, trading, and broader crypto business activities.
- The UK's progress in establishing a regulatory framework for cryptocurrencies and stablecoins is slower compared to financial hubs like Singapore, Hong Kong, and Abu Dhabi, which have already adopted more comprehensive legislation.
- George Osborne, a member of Coinbase's advisory council, believes the UK had an opportunity to lead the crypto industry but has noted that the country is currently being left behind due to a slow approach, comparing the situation to Nigel Lawson's Big Bang in the 1980s.
