UK Crypto Ambitions Face Delays as Regulatory Clarity Lags Global Peers

The United Kingdom’s ambitions to establish itself as a global hub for cryptocurrency have encountered delays, yet recent developments suggest a cautious shift toward regulatory clarity. Despite repeated pledges from past governments, progress on creating a crypto-friendly legal framework has been slower than anticipated, with industry stakeholders expressing frustration over the pace of reform. However, emerging initiatives and consultations indicate the UK may be inching toward a more structured approach to regulating digital assets.

The Conservative government under former Prime Minister Rishi Sunak introduced proposals in 2022 to position the UK as a crypto hub, including recognizing stablecoins as payment tools and establishing a regulatory sandbox for blockchain innovation. These measures, while promising, have yet to translate into comprehensive legislation. The Labour government, now led by Keir Starmer, has shown limited urgency in advancing crypto policy, with the issue often taking a backseat to broader economic priorities. Tom Spiller of Rosenblatt Law noted that Labour’s approach appears “more cautious” and lacks a clear strategic focus within its core policy agenda [1].

Despite the lack of rapid legislative action, some industry observers detect positive momentum. James Harris, CEO of fintech firm Tesseract, highlighted that recent regulatory consultations, such as the HM Treasury’s 2025 review and the Financial Conduct Authority’s (FCA) CP25/14 paper, signal a potential reclassification of crypto as a legitimate asset class under the Financial Services and Markets Act (FSMA) [2]. These proposals aim to address gaps in existing laws by allowing stablecoin issuance, staking, and other crypto activities. However, the FCA’s proposed rules for stablecoin custodianship and crypto custody have not yet been finalized, leaving uncertainties unresolved.

The Property (Digital Assets, etc.) Bill, currently under parliamentary debate, could mark a significant step forward by recognizing digital assets as property. If enacted, the bill would provide legal clarity on ownership and inheritance rights, a critical factor for institutional adoption. Industry groups, including CryptoUK, have intensified lobbying efforts to persuade regulators to adopt fairer banking policies for crypto firms and revise advertising rules that currently restrict promotional activities [3]. Spiller added that the UK also has opportunities to improve its management of seized crypto assets, which could enhance public trust in the sector.

Comparisons to global peers highlight the UK’s relatively slow progress. While the European Union is finalizing its Markets in Crypto-Assets (MiCA) framework and the United Arab Emirates has embraced crypto as part of its economic strategy, the UK lags behind. Harris acknowledged that the U.S., despite its political divisions, is making “meaningful legislative progress,” with the recently passed GENIUS Act addressing stablecoin regulation and the upcoming CLARITY Act aiming to create a tailored crypto regulatory regime [4]. The UK’s delayed action risks driving talent and investment to jurisdictions with clearer frameworks, according to Spiller.

Industry players stress the need for nuanced regulations that balance innovation with consumer protection. While the UK has implemented anti-money laundering measures and the Travel Rule for crypto transactions, many projects still struggle to fit within traditional financial regulations. Harris emphasized that the consolidation of the crypto industry—where smaller, non-compliant firms exit and larger players dominate—will depend on the government’s ability to finalize supportive policies.

The UK’s crypto sector remains in a transitional phase, with stakeholders cautiously optimistic about recent developments. However, analysts warn that without accelerated legislative action, the UK risks falling further behind in the global race to define the future of digital finance.

Source:

[1] [UK crypto hopes stall, but ‘encouraging signs’ are there]

[https://cointelegraph.com/news/uk-crypto-hopes-stall-starmer?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound]

[2] [UK crypto hopes stall, but ‘encouraging signs’ are there]

[https://cointelegraph.com/news/uk-crypto-hopes-stall-starmer?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound]

[3] [UK crypto hopes stall, but ‘encouraging signs’ are there]

[https://cointelegraph.com/news/uk-crypto-hopes-stall-starmer?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound]

[4] [UK crypto hopes stall, but ‘encouraging signs’ are there]

[https://cointelegraph.com/news/uk-crypto-hopes-stall-starmer?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound]