Key Takeaways:
The United Kingdom's ambition to become a global cryptocurrency hub is being undermined by regulatory gridlock, with key frameworks not expected to be fully implemented until October 2027, prompting warnings that firms are already relocating to jurisdictions with greater clarity.
"We have a situation at the moment whereby the Treasury is looking to set the law, and then we're having the FCA looking to have publicly-issued stablecoins and a Bank of England-issued digital pound," Jonny Fry, a blockchain researcher and CEO at TeamBlockchain Ltd., said at the Digital Money Summit 2026 in London.
The institutional friction between HM Treasury, the Bank of England, and the Financial Conduct Authority (FCA) has created deep operational uncertainty. Fry cited the crypto derivatives exchange Deribit's relocation as a missed opportunity that cost the UK hundreds of millions in potential tax revenue. This administrative infighting is in stark contrast to the European Union's Markets in Crypto-Assets (MiCA) regulation, which provides a comprehensive framework across the bloc.
Without a competitive digital pound or clear rules for sterling-backed stablecoins, the UK risks the "dollarization" of its digital asset markets, where transactions default to U.S. dollar-backed stablecoins, Fry warned. The primary risk is not that firms physically leave, but that the next generation of digital financial infrastructure is built elsewhere, costing Britain investment and influence.
While industry figures express frustration, regulators maintain they are making calculated progress. Matthew Long, Director of Payments and Digital Assets at the FCA, insists the UK has a "comprehensive regime that's open for business right now." He encouraged firms to use the FCA's pre-application support service, framing the timeline as a modular rollout designed to create a robust system.
This deliberate pace is also seen in other areas. The Bank of England and FCA are moving to extend the operating hours of the Real-Time Gross Settlement (RTGS) system to nearly 24/7. This move is designed to support tokenized asset settlement, showing that foundational work for a digital economy is underway, albeit on a timeline the private sector finds frustratingly slow.
However, the core conflict remains. While the FCA opens its doors for controlled tests, the lack of a definitive, overarching legislative framework leaves businesses in limbo. Andrew MacKenzie, CEO of sterling stablecoin developer Agant, previously said that while regulations were moving in the right direction, the pace was too slow to support the UK's global ambitions, a sentiment now echoing across the industry.
This article is for informational purposes only and does not constitute investment advice.
