UK crypto hub ambitions face regulatory delays as market framework lags U.S. and Europe

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UK crypto hub and regulation delays

Highlights

Conflicting roles between HM Treasury, FCA, and Bank of England are delaying the UK’s unified digital asset framework, causing operational uncertainty for tokenized deposits.
Industry voices at the Digital Money Summit 2026 cite Deribit's decision not to locate in Britain as an example of lost business due to unclear staking and tax treatment.
Slow UK regulatory progress versus faster U.S. and EU frameworks risks liquidity outflows and increased transaction reliance on U.S. dollar-backed stablecoins, warning of possible dollarisation.

Regulatory split slows crypto policy rollout

As reported by CoinDesk, industry participants at the Digital Money Summit 2026 in London say conflicting responsibilities between HM Treasury, the Bank of England and the Financial Conduct Authority are delaying a unified framework for digital assets.

Jonny Fry, founder of Digital Bites and CEO of TeamBlockchain Ltd., says the bigger risk is not companies physically leaving Britain, but the next generation of digital asset infrastructure being built elsewhere. He argues that the current division between Treasury rule-setting, the FCA’s approach to publicly issued stablecoins and the Bank of England’s work on a digital pound is creating operational uncertainty around tokenized deposits and other digital assets.

Fry says that lack of clarity has already cost the UK potential business. He points to crypto derivatives exchange Deribit as an example, arguing that clearer treatment of staking could have helped attract the company to Britain, with possible tax benefits after Coinbase’s acquisition of the platform.

The FCA is presenting the pace differently. Matthew Long, the regulator’s director of payments and digital assets, says the regime is already open for business and that firms are being encouraged to apply through a pre-application support service.

Competitive pressure builds across digital asset markets

Concerns over the pace of reform are intensifying as the UK competes with policymakers in Washington and Brussels that are seen as moving faster to provide usable frameworks for the sector. Andrew MacKenzie, CEO of sterling stablecoin developer Agant, says in February that regulation is heading in the right direction, but too slowly to support the country’s ambition to become a global digital asset hub.

A Financial Times article last week also says the Bank of England’s cautious stance is frustrating private sector groups seeking faster integration, with restrictions on stablecoins contributing to a regulatory bottleneck. The FCA, caught between political priorities in Downing Street and central bank concerns over monetary stability, is focusing on controlled testing environments rather than public criticism of the process.

Fry warns that if regulators fail to move with market speed, liquidity is likely to migrate to jurisdictions where capital can operate more freely. He adds that without a competitive digital pound alternative, transaction settlement could increasingly rely on U.S. dollar-backed stablecoins, raising the risk of dollarisation.

Our earlier article on the Bank of England’s gilt sales strategy explained why the central bank has kept active bond sales in its quantitative tightening programme despite pressure in UK government debt markets. We noted that the BoE is reluctant to change course outside its regular review cycle unless trading becomes clearly disorderly, even though higher gilt yields can translate into materially higher UK borrowing costs.

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