By Daniel Taylor, head of policy at Zumo
Five years on from the promise of the UK as a “global crypto hub,” critics have seized on slow rule‑making, low approval rates and what they call burdensome “positive frictions.” Those frictions have reduced consumer choice compared with some other markets, and political commentary has often focused on warnings rather than constructive support.
But the reality is more nuanced. The UK remains the largest crypto market in Western Europe: Coinbase counts it as its second‑largest market after the U.S., and UK users remain active in decentralized finance. That bottom‑up demand is nudging policy and markets in a new direction.
Recent signals point to a quiet pivot. Retail investors can once again buy crypto exchange‑traded products. The U.K. and the U.S. are coordinating on digital‑asset policy. The Financial Conduct Authority has begun processing applications more quickly, and sterling‑denominated stablecoins are emerging. Taken together with ongoing legal and regulatory moves, these developments suggest a materially improved operating environment over the next 12–24 months.
Key milestones are visible on the horizon: activity‑based rules are expected to be finalized by 2026 and a live regulatory framework by 2027, and digital assets have gained legal recognition as property following final Royal Assent. Those changes will remove several structural impediments that have held the sector back.
For firms, that clarity matters. The forthcoming framework is set to clarify how to custody assets, run trading venues, issue stablecoins and provide staking services. Some proposed protections go further than in other jurisdictions: for example, placing customer assets held by third‑party platforms into legal trusts would better protect investor property rights, a direct response to the unsecured‑creditor failures of 2022.
For global exchanges, a branch‑subsidiary approach could enable retail access while preserving global order‑book connectivity and allocating supervisory responsibilities between home and host regulators. Nearby proposals include central bank backstops, direct Bank of England accounts for systemic sterling stablecoins, and tokenized‑fund rules that permit native issuance and settlement in stablecoins. These measures aim to leverage the UK’s established legal and financial infrastructure to support innovation.
There is still more to do. Beyond rulemaking, the UK should seize crypto’s wider upside: use tokens to enable new capital‑raising channels; recognize and support genuine self‑custody alongside regulated custodians; and harness cryptography to improve privacy, personal sovereignty and seamless cross‑border value transfer.
In short: progress has been uneven and politics periodically skeptical, but the UK is quietly repositioning itself. With clearer regulation, legal certainty and nascent market infrastructure, the UK is becoming open for crypto business — with a chance to compete on both innovation and investor protection.
Note: This is the author’s opinion and may not reflect the views of Cointelegraph.com. The piece underwent editorial review for clarity and relevance. Readers should carry out their own research before taking any actions related to the topics discussed.