The UKโs unclear regulatory stance on digital assets is drawing sharp criticism from market participants, with some citing โpolicy procrastinationโ as a key reason the country is falling behind both the European Union and the US in the race to define digital finance.
In a Friday blog post, John Orchard, chairman, and Lewis McLellan, editor of the Digital Monetary Institute at the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank, argued that the UK has wasted its early-mover advantage in distributed ledger finance.
The post, titled โThe UK keeps missing the boat on DLT finance,โย ย said that the UK, once expected to set a post-Brexit gold standard for crypto regulation, continues to โtalk un-specifically about regulation in the future.โ
โAs it stands, there is a date conspicuously missing for the โRegime go-liveโ portion of the Financial Conduct Authorityโs โCrypto Roadmap,โ though it suggests some time after 2026,โ Orchard and McLellan wrote.
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EU and US introduce crypto regulations
The European Unionโs Markets in Crypto-Assets (MiCA) framework is already in effect, while the US Senate recently passed theย Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, a landmark bill establishing federal guardrails for stablecoins.
However, the UKโs Financial Conduct Authority still lacks a confirmed go-live date for its crypto regime. โThis absence of a workable framework retards the UKโs ability to adapt to the possibility thatโฆ all of finance is going onchain,โ the authors wrote.
The criticism also focuses on the UKโs approach to stablecoins. Unlike the US, which treats them as distinct payment tools under the Genius Act, UK regulators have lumped them in with crypto investment assets, a move that has โmystifiedโ the market.
The Bank of Englandโs initial stance only deepened concerns. Its draft framework required systemic stablecoins to be backed entirely by central bank money โ a condition industry players argued would make issuance commercially unviable. While the Bank has since begun to ease this position, it hasnโt yet offered a workable model.
Related: The crypto fund domicile decision: EU or the UK?
Jurisdictions move forward with crypto regulations
Meanwhile, other jurisdictions are making strides. In May, Hong Kong passed a stablecoin bill and is rapidly developing a tokenization ecosystem through its Project Ensemble initiative.
The authors also praised the United Arab Emiratesโ Virtual Assets Regulatory Authority (VARA) for being a dedicated digital asset regulator, unlike the UKโs attempt to adapt legacy institutions to new financial models.
The blog concluded that while the UK led fintech innovation in the 2010s and still benefits from advantages like its time zone, language, and legal system, its position is far from secure. โFinancial centers come and go,โ the authors warned, urging swift action from regulators.
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