Category Archives: Tech

Policy Spotlight: Energy and Net Zero

Foreword

Scott Dodsworth, Managing Director and Senior Partner at GK Strategy

The central part of Labour’s election pitch to the country last year was unlocking economic growth. Over Labour’s first year in office, it remains clear that Energy Secretary Ed Miliband, with the backing of the Prime Minister and Chancellor, sees delivering energy security and the net zero transition as central to that.

The consistently high cost of energy, against the background of an ongoing cost of living crisis and struggling public finances, is contributing to growing scepticism about the transition to net zero – largely from the Conservatives under Kemi Badenoch, and an increasingly popular Reform party. Despite this, the Prime Minister has doubled down on net zero as part of the UK’s industrial strategy.

After something of a false start after the 2024 general election, the government is now moving at pace. It sees the remainder of 2025 as a crucial period to deliver on its promises to an impatient electorate: to bring down energy bills and push to 95% clean power by 2030. Since the spring, we have seen the government publish its Industrial Strategy, of which green industries were seen as a frontier sector. Ed Miliband also secured a healthy departmental budget in the June spending review despite cuts elsewhere. These, together with the wider cross government approaches to planning, infrastructure and the National Wealth Fund, are all signals that the government is kicking up a gear on its net zero delivery.

To deliver on its promises, the government is looking for solutions from businesses. There is a renewed willingness across Whitehall to engage with those who can partner with government to unlock the private investment to fund these commitments at the pace and scale required. There is also impatience within mission-driven departments to ‘get on with the job’ – including for DESNZ’s ‘Mission Control’ – so speed is of the essence. Good government relations have rarely been so important to businesses that want to be on the right side of the relevant policy debates underpinning this mission.

Our cross-sector and connected team at GK Strategy is immersed in energy and industrial policy. We work to support businesses and investors to better understand the political and regulatory environment and align our advisory services around your strategic and commercial aims. This report takes a closer look at the key pillars of the government’s net zero agenda: energy efficiency, grid and power supply, and transport decarbonisation.

In politically febrile times like these, it is important that organisations are consistently making their case to government so that they can maximise opportunities where they arise, as well as mitigate risk. We look forward to working with you to realise opportunities.

Energy efficiency – the quiet engine powering Labour’s net zero agenda

Sam Tankard, Senior Associate

In the race to net zero, energy efficiency is perhaps one of the less glamourous parts of the policy puzzle. The government’s mission to achieve 95% clean power by 2030 has dominated public messaging and policy bandwidth. But while clean energy generation captures the headlines and the government’s attention, reducing demand through insulation and electrified heating remains one of the more cost-effective levers available to a government with little money to throw around.

Retrofit and ‘fabric first’ measures – such as insulation upgrades and draught-proofing – are proven, scalable technologies that deliver immediate benefits, not least on household bills. After all, the cheapest energy is that we don’t use. With many households still feeling the impact of the cost-of-living crisis, voters are likely to judge the success of the energy transition by whether they feel it’s becoming cheaper to heat their homes. In that context, energy efficiency should be seen as not just central to climate strategy, but to the government’s economic and electoral strategy.

The Warm Homes Plan: A consolidated approach

The government’s flagship Warm Homes Plan aims to consolidate and scale existing schemes including the Warm Home Discount, Boiler Upgrade Scheme, and the Social Housing Decarbonisation Fund. It also introduces new Minimum Energy Efficiency Standards (MEES) across both the private and social rented sectors. Energy Secretary Ed Miliband successfully secured the full £13.2 billion needed to deliver the scheme in the June spending review – no small feat in a fiscal environment defined by restraint. This commitment is a clear signal of Labour’s intent to start to put energy efficiency on a par with clean energy generation – and of Ed Miliband’s strength within the Cabinet, despite the negative briefings against him.

Will the Plan deliver a genuinely integrated approach to home decarbonisation, or is it a rebranding of legacy Conservative programmes? The recent restructure of DESNZ – giving the Plan its own delivery team – suggests it will. Energy efficiency is also being linked to job creation, supply chain development, and regional growth. However, if this ambition is to be realised at scale, subsidies alone and piecemeal grants will not suffice. The sector needs a long-term investment framework that can attract institutional capital and mobilise private finance – one that de-risks retrofit projects, supports innovation across the supply chain and gives confidence to the investor community. This framework has not yet been brought forward, and its absence may hamper large-scale investment in the space.

Regulation will drive the market

Regulation is beginning to move the dial. Reforms to the Energy Performance Certificate (EPC) methodology will require more homeowners and landlords to invest in fabric-first improvements, smart controls, and low-carbon heating. From 2026, new MEES requirements and an updated Decent Homes Standard are set to kick in, compelling landlords to upgrade their properties by 2030. These reforms are expected to drive significant market demand through the remainder of this Parliament – providing a welcome growth stimulus for retrofit supply chains, innovators and engineers.

Clean heat still stuck in second gear

Progress on the clean heat transition continues to lag behind the government’s targets. Labour has consulted on expanding the Boiler Upgrade Scheme to include air-to-air heat pumps and heat batteries, reflecting a desire to support a range of technologies. However, political caution looms large. The backlash faced by Germany over heat pump mandates has made ministers wary of appearing prescriptive, particularly where upfront costs for consumers, and particularly for lower income households, remain high for these technologies.

Heat pumps are still significantly more expensive than gas boilers, both in terms of installation and ongoing energy costs. Public funding falls short of matching the scale of ambition set by national targets. As of May 2025, the UK had just 412 heat pumps per 100,000 people, compared to over 3,000 per 100,000 across comparable European countries, highlighting the significant implementation gap in the UK.

The electricity pricing trap

Underlying many of these challenges is a structural pricing problem. The UK’s gas-heavy energy mix means that gas sets the marginal price of electricity 98% of the time, compared to just 39% in other European markets. As a result, electricity remains artificially expensive, making the economics of clean heat harder to justify. Labour’s clean power push aims to shift this overreliance on gas but change will take time.

In the interim, the government is considering options such as rebalancing environmental levies away from electricity and onto gas, or absorbing them into general taxation. These options are politically sensitive and the nettle is yet to be grasped. The recent debate over zonal pricing in the electricity market review signals deeper tensions in how costs are distributed geographically and socially.

The pricing debate about who pays for energy in a way that is fair will be back soon enough. How this will impact the decarbonisation of heat will be one businesses should follow closely, and take the opportunity to share their view accordingly.

Energy efficiency may not dominate the net zero headlines, but for a Labour government seeking to deliver tangible economic outcomes, reduce bills, and meet its climate targets, it is increasingly central to the political and policy equation. The coming months will reveal whether this this is matched by delivery, investment, and a market framework robust enough to make retrofit a genuine national success story.

Clean power meets smart tech

Noureen Ahmed, Adviser, and Arth Malani, Researcher

The government’s Clean Power 2030 Action Plan, published late last year, positioned wind and solar energy as the backbone of the UK’s future energy system.

It also highlighted how these developments will support the rapid growth of Artificial Intelligence (AI) and the digital infrastructure underpinning it, particularly data centres. It is no surprise that clean energy and AI remain central pillars for this government, as they underpin both economic competitiveness and energy security in an increasingly volatile global environment.

The government is committed to securing a cost-effective, low-carbon energy system while catalysing the growth of new energy and technology industries. Leveraging cutting-edge technologies such as automation and AI will be crucial to accelerating the decarbonisation of the grid, reducing emissions, and enhancing system resilience. Against a backdrop of rising geopolitical tension and global energy market instability, the Action Plan – and the subsequent strategy documents like the Clean Energy Industries Sector Plan and Solar Roadmap – underscore the urgency of fortifying the UK’s energy infrastructure. These initiatives also work towards derisking much of these large scale renewable generation projects – particularly through changes to the contracts for difference auction programme.

Grid connections still an obstacle

One of the most pressing challenges identified in recent strategy documents is the exponential growth of the grid connection queue, which has expanded more than tenfold over the past five years. Financial and regulatory barriers have slowed progress, stalling renewable projects at a time when urgency is paramount. In response, the government is pivoting toward a more agile, readiness-driven grid connection regime. By reforming planning frameworks and moving toward a “get on or get out” approach to the queue with Ofgem and the National Energy System Operator, the government is sending a strong signal to renewable developers that this government is about more than just subsidies to stoke supply. The intended outcome is twofold: accelerating the deployment of renewable infrastructure while enabling the co-location of energy-intensive facilities, such as data centres and transformers, near these clean power sources. This strategic alignment demonstrates the increasingly symbiotic relationship between AI technologies and the energy transition.

This approach reflects the growing economic footprint of the UK data centre industry, which currently contributes £4.7 billion in Gross Value Added (GVA) annually, a figure projected to rise to £44 billion by 2035. Unlocking the productivity and innovation gains associated with AI and data centres will be key for the UK’s global competitiveness. Yet the growth of this sector brings significant energy challenges. As one of the most energy-intensive industries, data centres demand not only increased capacity, but a cleaner, more reliable energy supply to keep compliant with many businesses’ own climate ambitions – as well as the government’s. The path to net zero must therefore keep pace with the evolving needs of the digital economy. A coordinated approach between the Department for Energy Security and Net Zero (DESNZ) and the Department for Science, Innovation and Technology (DSIT) will be fundamental in aligning energy and digital infrastructure planning.

Powering the AI transition

To help navigate these challenges, the government has established the AI Energy Council, a cross-sector forum of energy and technology leaders focused on ensuring the energy system can accommodate the explosive growth of AI. The Council has a dual remit: to guide infrastructure planning for AI-related growth, and to assess the more than 200 bids from local authorities vying for designation as AI Growth Zones – regions earmarked to become hubs for AI development and deployment. These zones sit at the intersection of energy policy and regional growth, dovetailing with the government’s broader devolution agenda, which aims to empower local leadership in strategic authorities to unlock economic potential.

The AI Energy Council has recognised that without targeted interventions in energy security and infrastructure, AI-led growth could stall. Ensuring a stable, clean, and scalable energy supply for AI-intensive industries is not just a technical challenge, but an economic one. Preventing energy-related bottlenecks will be key to enabling innovation across all sectors – from manufacturing and transport to healthcare and financial services. As the UK accelerates its clean energy transition, AI will not only be a consumer of energy but also a catalyst for smarter, more resilient energy systems. AI-enabled grid forecasting, predictive maintenance, and autonomous energy trading are already beginning to redefine how power is generated, distributed, and consumed.

Taken together, these developments mark a new phase in the UK’s industrial strategy – one where the convergence of clean energy and digital technology is central to the nation’s economic, environmental, and geopolitical goals. As such, AI and energy should not be seen as separate policy challenges, but as intertwined pillars of a modern, secure, and sustainable economy.

Little slack in the government’s decarbonisation tightrope, especially for transport

James Allan, Senior Adviser

The government is walking a decarbonisation tightrope. Nowhere is this clearer than in its approach to transport. As the net zero consensus is fracturing, most acutely under building pressure from the right of the British political system, onlookers will have noticed a few shifts in government policy impacting transport decarbonisation. This includes a watering down of the Zero Emissions Vehicle (ZEV) mandate and a previously unthinkable policy position on Heathrow expansion for a Labour cabinet. These are the perhaps inevitable concessions that have to be made in the face of a seemingly undeniable fact: decarbonising the transport sector entails an element of economic trade off.

These two decisions, measured against what Labour committed to in its election manifesto, throw into sharp relief a common critique of this government: that the manifesto’s language was sufficiently opaque to allow for a significant degree of wiggle room. Now in government, there is plenty of talk of change, but a continuing weakness on policy detail and substance, not least concerning transport decarbonisation.’

Understanding the rationale behind the government’s policy choices will be critical for businesses and investors looking to engage with ministers. As policy positioning subtly changes in government from bold rhetoric to balancing economic pragmatism with climate ambitions, sectors such as aviation, freight and automotive will need to recalibrate their expectations. Businesses will need multiple channels of influence as transport decarbonisation spans a range of policy areas, priorities and government departments. For the Department for Energy Security and Net Zero, the focus is clean energy by 2030; for the Department for Transport, it is rail nationalisation and infrastructure delivery.

Backing Heathrow expansion

Expanding Heathrow is a long way off despite the government’s recent support. Ministers have set out four tests for approval, including i) compatibility with the UK’s climate change targets, ii) mitigations to increases to noise pollution, iii) and air pollution, as well as iv) providing economic benefit to all parts of the UK, not just London and the South East. The fast-tracked review of the Airports National Policy Statement will provide substance to these four tests and commitments to sustainable aviation fuel (SAF) are expected to feature strongly when the refreshed policy statement is published later this year.

The justification is clear. The expansion of Heathrow, while mandating that the industry transitions to SAF (which is in short supply globally) is immensely costly and requires high levels of capital investment to deliver. To support the transition, the government is legislating for a revenue certainty mechanism that aims to de-risk and attract private investment into this nascent technology. It is the familiar carrot and stick approach to transport decarbonisation of mandate and incentives.

Mild tweaks to the ZEV mandate

The government’s tweaks to the ZEV mandate reinstated the 2030 target of banning the sale of internal combustion engine (ICE) cars but relaxed the rules around which vehicles can be sold until 2035, including hybrid vehicles and ICE vans, and introduced greater flexibilities for manufacturers. The mixed reaction from the automotive industry suggests that ministers may have struck a workable compromise – a willingness to trade speed for political and economic deliverability.

Key to pulling off the transition to EVs is scaling up the deployment of EV infrastructure and chargers. Consumer confidence to purchase and drive an EV across the country is an important precursor of the transition to EVs. A lack of publicly available chargepoints risks this and stokes the flames of range anxiety often cited as a major barrier to buying an EV vehicle. Government work toward mitigating this risk is chiefly being delivered through the Local EV Infrastructure (LEVI) Fund but buried deep within the spending review published in June was £400 million to support the roll out of charging infrastructure from 2026-27 to 2029-30.

Walking the government’s tightrope

For businesses and investors, the key message is that the government’s transport decarbonisation agenda is no longer linear, but layered, tactical and coloured by a degree pragmatism. Backing Heathrow and making tweaks to the ZEV mandate indicate that the terms of reference are not solely climate related but also economic. Labour’s policy decision making has shifted from the aspirational and broad ambitions set out in its manifesto, to a slow recalibration of understanding better the trade-offs involved. For investors looking to capitalise on transport decarbonisation and businesses operating in associated sectors, the implication is clear: aligning with the government’s transport decarbonisation goals now requires a credible case for job creation and economic growth and cost efficiency. Those that can anticipate and influence shifts in government thinking stand to benefit, while those that wait for clarity may be too late to adapt and overcome.

Contact Information

Contact: 020 7340 1150

Louise Allen // Senior Partner & Chief Executive // louise@gkstrategy.com

Scott Dodsworth // Senior Partner & Managing Director // scott@gkstrategy.com

Lizzie Wills // Senior Partner and Head of Private Equity // lizzie.wills@gkstrategy.com

Sam Tankard // Senior Associate // sam@gkstrategy.com

From farm to fork: An ambitious food strategy published by Defra

The government has published its food strategy, setting out a vision for a healthier, more affordable, sustainable and resilient food system. It is ambitious in scope and designed to reconcile often competing objectives from farm to fork.

The food strategy identifies three interlocking dynamics of the UK food system:

i) a junk food cycle driven by our appetite for highly processed, energy-dense foods and the strong commercial incentives this creates to produce foods high in sugar and fat,

ii) the invisible cost to nature which fails to reward sustainable and environmentally friendly food production, and

iii) a resilience gap that means the UK is highly exposed to multiple and increasing risks, such as climate change.

The next step for ministers and officials is to develop an implementation plan, as well as metrics and indicators to measure progress towards achieving the strategy’s ten priority outcomes. This will take time and require ministers to engage with industry and business to ensure the government’s transition to a ‘good food cycle’ is achievable. It will also need to align with forthcoming strategies in Defra’s to-do list to deliver real, joined-up change across the entire food system. To name a few – the Land-Use Framework, the Food and Farming Decarbonisation Plan, the Farming Roadmap and Farming Profitability Review, and the Circular Economy Strategy.

What does the food strategy mean for agri-tech?

There is a huge opportunity for businesses in the space to engage with government off the back of the publication of the food strategy. Ministers clearly see innovation as critical to resolving system challenges in everything from public health to food security. Agri-tech businesses should take note: the government is not only signalling interest but actively investing in solutions that can deliver measurable impact.

To maximise this opportunity, businesses should look to demonstrate how they can support the government in achieving the food strategy’s core objectives – boosting productivity, enhancing resilience and delivery environmental sustainability. Collaborating with early adopters to demonstrate real-world use cases can help build a compelling evidence base that convinces policymakers of a solution’s viability and impact. Engaging with policymakers means staying ahead of regulatory change and shaping policy and market reforms to establish pathways to commercialisation.

Agri-tech may well represent the silver bullet policymakers are searching for, but unless the sector speaks up and showcases its impact, those solutions risk going unnoticed.

If you need help with demonstrating how you can become a key player in the government’s food strategy, contact GK Strategy today.

Sky’s the limit: Why agri-tech should engage on drone law reform

Drones and autonomous flight technologies are set to revolutionise how we travel, deliver goods and produce food, and the government has taken note. As part of a comprehensive three-year review into the regulatory framework of autonomous flight and the use of drones, the Law Commission has launched a second consultation. Its three-year review is nearing completion with recommendations expected to be published by early 2026 and will shape how this fast-moving sector evolves. For innovators in agri-tech and beyond, the opportunity to help design the rules that will govern a sky filled with commercial drones is now.

Flying free from EU constraints

Legislative agility to facilitate innovation is the ambition and ties into the government’s wider economic growth agenda. Aviation law in the UK is prescriptive and duly geared towards the passenger aviation sector. With the UK no longer bound by EU aviation rules, policymakers can now craft a more bespoke, agile regulatory environment that encourages experimentation, accelerates innovation and attracts investment.

However, the government has identified a possible post-Brexit dividend as the current regulatory regime is largely a carryover from current EU law. This presents a unique opportunity to break away from legacy constraints and design a tailored regime for UK-specific innovations and ambitions. A more flexible regime could fast-track the safe deployment of cutting-edge drone technology and give UK-based companies a first-mover advantage, enabling them to export innovations globally.

Drones on farms: Unlocking agri-tech potential

Commercial applications of drone technology are wide ranging. For the food and agriculture sectors alone, drones could revolutionise farming operations:

Precision agriculture from monitoring crops based on thermal sensors to scanning fields and accurately predicting crop yields.
Agricultural sprays deploying pesticides, fertilisers and herbicides thereby reducing labour costs, use of chemicals and their environmental impacts, and identifying diseases or pests to prevent wider outbreaks.
Irrigation management by identifying drainage issues to drought-stressed areas and enabling the more efficient use of water and real-time crop water requirements.
Crop insurance and assessment by providing accurate, unbiased and detailed imagery required by insurers to speed up claims processes.
Harvesting assistance by providing crop maturity assessments to more effectively plan harvesting schedules and boosting the quality of crop yields.
Forestry and orchard management by measuring canopy growth, quantifying tree populations and aiding pruning schedules.

The economic case for drone-powered agriculture

There are many economic benefits – from reduced labour and input costs through more precise allocation of resources, to increasing crop yields via data driven decision making. Lower chemical and water usage not only cuts costs but also supports environmental sustainability. For businesses able to make the capital investment, drone technology is set to become a core component of modern agricultural management, policymakers should be engaged on this.

Government support signals lift-off

There is clear momentum in government to embrace drone technologies. The aviation minister has confirmed £20 million in funding for new flight technologies, including £5m earmarked for the Future of Flight Challenge. These initiatives could create government-backed testbeds for agri-tech solutions and help de-risk businesses ready for investment. For innovators in the sector, this is a moment to engage directly with policymakers, to shape the regulatory framework and unlock the commercial potential of drone led farming. The Law Commission’s second consultation is open until 18 July 2025, and alongside a wider engagement programme, this is a key opportunity to have your voice heard and set the direction of travel for the sector.

To go boldly: UK Strategic Defence Review 2025

The UK Government has now published its long-awaited Strategic Defence Review (SDR). Speaking at a BAE Systems shipyard on the Clyde, the Prime Minister said the UK military is moving to ‘war-fighting readiness’ and, in step with the wider growth agenda, Sir Keir emphasised a role for the whole country in this new defence enterprise.

This review differs significantly from previous strategic defence (and security) reviews, and its output will be followed closely by allied capitals. It has the potential to be a transformational blueprint, with offensive cyber, technology and autonomy at its centre, to face the ‘new era of threat’.

The SDR was led by the respected former Labour Secretary of State for Defence and past NATO chief Lord Robertson, with an extended external team including Dr Fiona Hill and General Sir Richard Barrons. Commissioned soon after Labour returned to government in July last year, it is the UK’s first externally led defence review. Its aim is to make a forward-looking assessment of the UK’s strategic defence interests and outline the corresponding military requirements. This is no easy ask in such a fast-changing world, which is in part why we also see the early confirmation of big-ticket commitments, including new hunter-killer submarines, a £15 billion nuclear warhead programme to equip the bomber boats, and new long-range weapons.

In the strategic context, the review is clear that both Russia and China are big state threats. It also highlights the growing role the digital world will play in the global defence and security landscape, and the review is the first of its type to put a significant focus on cyber capabilities.

The balance here is between resource and the review’s four lenses: NATO-first; global responsibilities; homeland defence; and hybrid grey-zone activity such as cyber-attacks. Artificial intelligence and drones are transforming modern warfare, so the government has committed to set up a new cyber command with a £1 billion package of investment. There is also good news for MBDA and BAE who will be in line for the new ‘defence factories’ as the UK gets serious about munition supplies, with a £1.5 billion commitment to establish at least six munitions’ facilities.

The Ministry of Defence is still experiencing challenges to frontline budgets and decisions in the government’s upcoming spending review, due to be announced on Wednesday 11 June, will demonstrate No.10 and No.11’s seriousness about putting the SDR’s findings into action.

Friends and adversaries alike will keep a close eye on whether this latest SDR will deliver for UK defence. In the near term, all of us involved in defence and security await the publication of the government’s industrial strategy, expected alongside next week’s spending review, and the many opportunities it will bring to engage with government in the weeks and months ahead.

Education and Digital Revolution: AI under Labour

The government is embracing the evolving landscape of artificial intelligence (AI) and attempting to integrate it into the education system. Improving mainstream education and increasing accessibility for young people has been central to Labour’s agenda, with one of the five key manifesto missions being ‘breaking barriers to opportunity’. To address challenges in mainstream schools, ministers are focused on issues such as teacher recruitment and retention. However, in the current economic and political climate, immediate solutions are limited, bar the initial 5.5% teacher pay rise in September 2024. To address these shortfalls in the long term, the government is exploring innovative ways to make the teaching profession more appealing and improve the overall efficiency of educational provision, including the use of AI to support teachers and school administrators.

As the government recognises the potential risks for young children when accessing AI, the introduction of AI into the classroom will be a teacher and administrator facing policy. To mitigate further issues, the government has committed to implementing safeguards. These safeguards include age restrictions on who can use AI tools and filtering and monitoring standards to ensure schools have the appropriate restrictions in place. However, with appropriate regulation, there is potential for expanding the use of AI tools to student facing use in supervised educational environments. Stakeholders and developers should anticipate these restrictions and the potential expansion from a teacher facing policy to one that includes students when developing AI models for educational settings.

AI models in education will focus on generative AI, with applications across various teaching and learning functions, such as creating educational resources, curriculum planning, feedback, revision activities, administrative tasks and supported personalised learnings. The government is also likely to encourage the introduction of other AI tools outside of the classroom that can enhance efficiency in schools and reduce administrative burdens. The new technologies and tools will likely require additional skills training for teachers and support staff. Organisations that provide the necessary training in this area, alongside the development of AI, are likely to be viewed favourably by government and schools.

To ensure a safe and responsible introduction of AI into the classroom, the government is collaborating with educational technology sector, experts and academics. As part of this dialogue, the government is piloting the EdTech Evidence Board to analyse the impact of edtech tools on teaching and learning. The Chartered College of Teaching is delivering the initial pilot scheme and is inviting organisations in the edtech sector to submit projects to the board later this year. This is an opportune moment for education service providers and stakeholders to engage with policymakers, demonstrating how their products can support the government’s educational objectives.

We’d be delighted to share our thoughts on what the government’s approach to AI and edtech could mean for you and how you can engage with the ongoing dialogue. Please contact mariella@gkstrategy.com if you would like to discuss the reforms with the GK team.

What does the future hold for crypto regulation?

Positioning the UK as a leader in the global market

UK policymakers and regulators have expressed their intention to encourage growth, innovation and competition in the digital assets industry. However, the government also wants to protect consumers and maintain market integrity. This is a balance that policymakers and regulators in other jurisdictions have found difficult to strike. The previous Conservative government wanted to make the UK a global hub for cryptoasset technology and investment – a goal shared by Keir Starmer.

Accelerating the timeline for reform

In 2018, HM Treasury (HMT) and the Financial Conduct Authority (FCA) began coordinating a phased regulatory approach, initially focusing on stablecoins before introducing new regulations for the wider cryptoassets industry.

Since the 2024 general election, the FCA’s approach has shifted slightly. The government has indicated its support for most of the reforms set out prior to the general election. However, Starmer is less focused on stablecoins than his predecessor and is likely to accelerate the timeline for the regulation of the wider cryptoasset industry, rather than adopt the phased approach.

The government is aware that other international hubs have also taken significant steps in regulating digital assets. The EU’s Markets in Crypto-Assets Regulation (MiCA) became fully applicable in December 2024 and has introduced a comprehensive regulatory regime for the European bloc’s digital asset market. Given the EU continues to work on secondary legislation to supplement MiCA and also requires crypto firms to align with other EU rules on governance and data-sharing, the EU’s new regime is likely to significantly increase the regulatory burden on firms. The second Trump administration has already signalled that it will take a much more lenient approach in the US compared to the Biden administration. Trump has issued an executive order directing agencies within his administration to create a regulatory framework that supports the cryptoassets industry and limits unnecessary government intervention.

Firms operating across multiple jurisdictions need to be cognisant of how the UK’s approach differs with other cryptoasset hubs to ensure compliance. The government is likely to favour an approach that places the UK somewhere between the EU and the US. While the UK’s eventual cryptoassets regime is likely to provide stronger consumer protections than a Trump-inspired US regime, it is unlikely to be as prescriptive as the EU on the categorisation of cryptoassets, the scope of regulated activities, and disclosure obligations for cryptoasset issuers.

Implementing the new regulatory regime

In November 2024, the FCA published a “Crypto Roadmap” of key dates for the development and introduction of the UK’s cryptoasset regime. The roadmap sets out a series of consultations focused on different aspects of the future regulatory regime to be held over the course of 2025 and during the first quarter of 2026, with the final rules published in 2026. This includes the completion of a consultation on the proposed creation of an information sharing platform for industry stakeholders (to be approved by HMT) to prevent market abuse and boost compliance with future regulation. The FCA also plans to consult on a governance regime in autumn 2025 including further measures to ensure crypto firms adhere to the FCA’s Consumer Duty and its Senior Managers and Certification Regime (SMCR). This would likely require individuals in senior roles at firms be approved by the FCA or the Prudential Regulatory Authority.

The cryptoassets industry is likely to benefit from Chancellor Rachel Reeves’ decision to urge regulators to accelerate efforts to support growth and innovation. As part of a wider deregulation push, Reeves tweaked the FCA’s secondary objective to make it clear that the regulator must do more to make the UK financial services markets more competitive than other countries. Although the FCA’s CEO Nikhil Rathi is concerned that deregulation could lead to ‘bad actors slipping through the net’, he has said that he is willing to consider the easing of some consumer protections to reduce the regulatory burden. This could be significant for the cryptoassets industry. Larger firms are currently better placed to comply with expected new regulatory measures, while smaller firms may not have the internal structures and resources to do so, potentially forcing them out of the market or creating opportunities for consolidation.

We’d be delighted to share our perspectives on what the government’s crypto and fintech reforms could mean for you and how you can engage with policy debates. Please contact joshua@gkstrategy.com if you would like to discuss the reforms with the GK team.