Britain's push to become a crypto hub is being held back by a gap between regulatory ambition and day-to-day implementation, according to former Financial Conduct Authority policymaker Isadora Arredondo. She says the UK is advancing more quickly for institutional digital asset activity than for startups and retail-focused firms, creating an uneven path for the sector.
Highlights
- Competing demands, including Brexit and pandemic fallout, slowed the UK FCA's crypto progress and shifted focus to consumer protection and broader rulebook changes.
- The UK currently uses a two-track approach, supporting large institutions via initiatives like the Digital Securities Sandbox while smaller crypto firms face slow authorization under legacy regulations.
- UK crypto regulations coming into effect in October 2027 will set high compliance hurdles, but meeting them could boost institutional credibility for approved firms.
Regulatory priorities shape crypto rollout
As reported by CoinDesk, Arredondo says the UK's slower progress on crypto stems less from hostility to the industry than from competing demands inside the FCA during key years of policy development. She points to Brexit, the COVID-19 crisis and the fallout from investment failures such as London Capital & Finance and the Woodford Fund as factors that pushed the regulator toward broader rulebook changes and stronger consumer protection priorities.Arredondo, now vice president of global policy at Hedera, says that experience exposed a wide gap between policy design and execution in practice. She argues crypto increasingly came to be viewed through a consumer-risk lens, especially under FCA chief executive Nikhil Rathi, even as the UK continued to promote itself as a potential global center for digital assets.
She describes the current framework as a two-track approach. On the wholesale side, the FCA is working proactively with larger financial institutions through initiatives such as the Digital Securities Sandbox, while smaller crypto firms are often left navigating long authorization processes under legacy rules instead of a dedicated framework such as the European Union's MiCA regime.
That split remains visible as the UK prepares crypto regulations due to take effect in October 2027. Arredondo says compliance with UK standards is difficult, but adds that firms that meet those requirements can gain institutional credibility in return.
Our earlier coverage of CME Group’s lawsuit against the CFTC examined a growing legal fight over the approval of bitcoin-linked perpetual futures and whether such contracts should be regulated as swaps rather than futures. We noted that the outcome could tighten oversight of crypto perpetuals and influence how quickly U.S. exchanges can bring new digital-asset derivatives to market.
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