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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.

GK Podcast: Skills England and Apprenticeships Reform

GK Strategy is pleased to present the latest episode of its podcast. This episode focuses on the government’s wide-ranging reforms to the apprenticeships and skills system, and the potential impact on employers, providers and learners.

In this episode we speak to GK Strategic Adviser and former Minister for Skills and Higher Education, the Rt Hon Robert Halfon, and former advisor to the Department for Education and former Director of EDSK, Tom Richmond.

The podcast can be listened to here: GK Strategy Podcast – Episode 3.

Navigating changes to food and drink packaging: A guide for investors

Mark Field, director and founder of Prof Consulting Group, outlines what investors need to know about packaging in the food and drink sector

Setting the scene

Food and drink packaging is undergoing major transformation with innovations at each stage of the value chain. By responding to regulatory, consumer, and supply chain challenges, companies are finding new ways to reach customers and help them shop more sustainably. The role of packaging is to keep food and drink intact, safe and fresh along its journey from producer to consumer. It provides a space to communicate information to customers and to represent a brand. Carefully managed, it is a window to showcase a company’s values, but poor execution risks significant brand damage.

Shifts in the regulatory and commercial landscape

Regulation – responding to concerns about environmental pollution and climate breakdown, the regulatory landscape is shifting to place responsibility on producers for the packaging they put into the market.

In Europe, the upcoming PPWR is part of the region’s circular economy plan to value waste and minimise its environmental impact. The new regulation updates existing rules and aims to harmonise how packaging is managed throughout EU countries, making trade smoother. PPWR will require all countries to increase the share of reusable packaging which includes deposit return schemes, targets, economic incentives and minimum percentages of reusable packaging. In addition, 70% of all packaging by weight must be recycled by 2030. For some companies this might mean investing in new packaging equipment to handle new materials, for example, in the transition from plastic to paper. For others it can mean an entirely new way of selling, such as using returnable glass jars instead of plastic pots.

Nations in the UK are considering (England) or have implemented (Wales) deposit return schemes where consumers return packaging to a retail outlet and receive money back. This requires investment into infrastructure such as reverse vending machines. Others are working with digital technology to trace their products through the recycling system starting with the home curb side collection and rewarding customers who participate.

The UK’s plastic packaging tax charges a flat rate per tonne of plastic packaging with less than 30% recycled plastic. Companies must ensure they have accurate information on the packaging they buy to submit data to a government register.

Communication on packaging sustainability must be accurate and not mislead consumers according to the upcoming EU Green Claims Directive and the UK’s existing CMA’s Green Claims Code. One of the goals is to ensure that consumers are empowered to participate in the circular economy and can make informed choices. Consumers and NGOs are alert to greenwashing and don’t hesitate to call out companies who overstep the line.

A new UN treaty to regulate the production and disposal of plastic is expected at the end of 2024. Brands are calling for a limit to the amount of virgin plastic produced and for support on recycling and reuse systems.

Consumers – people expect companies to ensure their packaging is sustainable and research shows they want to participate in the transformation. According to global surveys, recycling packaging is the most popular sustainable behaviour, practiced by 62% of people. Companies can respond to these needs with clear and accurate disposal communication and with innovation in packaging formats.

Supply chains – extracting raw materials places undue pressure on natural resources and creates pollution that worsens climate and nature breakdown. Reducing the extraction of virgin raw materials, such as oil and timber, is urgent. Food and drink companies can limit their contribution to these challenges and take the opportunity to strengthen their resilience in the face of shortages and rising costs. UK and EU packaging leaders are moving from efficiency and lightweighting towards new materials, recyclable and recycled, and reusable packaging formats. For example, alcoholic drinks companies are experimenting with infinitely recyclable aluminium instead of glass, and being lighter, the product has fewer transport emissions.

Risks and opportunities

Companies who are unable to understand or keep pace with regulatory changes face increased costs resulting from levies on non-recyclable packaging, fines for misleading green claims and increased costs of excess packaging. Evidence shows that if customers are disappointed, companies will lose sales.

However, leading companies in the sector are embracing the transformation and innovating across the value chain. For example, with smart packaging technology using freshness tags; using alternative materials to plastic such as seaweed coatings and mushroom fibre cushioning; and using more reusable and refillable packaging. Infrastructure to support circularity is also growing, with refill stations, mobile and fixed reverse vending machines, and scanning and tracking technology increasingly prevalent. Cameras and cloud-based systems can be used to enable traceability and visibility over each process involved in collecting, recycling and cleaning packaging.

Companies that can promote and support convenient sustainable living will succeed in today’s crowded market. Many value-driven brands are entering the market and winning customers on this basis.

What should investors be asking?

Investors who want to understand the sustainability of packaging used by food and drink businesses should be asking management teams the following questions:

How does the business actively prepare for upcoming regulatory change and comply with existing regulations?

Does the business follow industry codes and benchmarks?

How does the business track the competitive landscape and identify gaps and innovations that resonate with consumers?

Does the business understand how customers use and dispose of their packaging?

Does existing packaging have clear recycle/reuse instructions?

Can the business substantiate claims on packaging sustainability?

Does the business know and manage the full life cycle along the value chain from raw material production through to disposal?

Does the business communicate their sustainability status openly e.g. on website linked to a QR code on packaging?

How does the business collaborate with stakeholders in all markets to ensure their packaging is reused/recycled correctly?

Prof Consulting Group helps to lead business to success in the UK and Australian food industry with its team of industry-leading experts and extensive range of services. For more information or to discuss how Prof. Consulting Group can support your business, please visit https://www.profcg.com/contact/

Will Trump derail Starmer’s policy plans?

GK Associate Josh Owolabi shares his thoughts on the impact of a second Trump presidency on the government’s policy agenda.

Messaging from the Starmer government since Trump’s election victory has focused on projecting calmness. The government believes that it has done its ‘homework’ on Trump and that both countries will prosper while Trump is in office. However, Trump’s unpredictability was a key characteristic of his first presidency. His penchant for breaking – or threatening to break – norms is well established and will induce anxiety within Downing Street. Trump does not do ‘orthodox’ and, in contrast to his first term, now has the full support of the Republican Party to make radical policy changes that could impact the UK economy and the Starmer government’s delivery of its policy agenda.

Trump’s view on the use of tariffs symbolises his unorthodox approach. He has proposed a 60% tariff on imports from China and up to 20% on goods imported from other countries as part of his ‘America First’ strategy. Economists and research institutes across the United States have criticised the plan, arguing that it is counterproductive as it would make goods more expensive for American consumers. This would also be problematic for the Starmer government as the US is the biggest market for high value goods from the UK, including pharmaceuticals, automotive parts, and medical products, and would likely impact pricing for goods in these industries.

The National Institute of Economic and Social Research (NIESR) has argued that the imposition of even a 10% tariff would be damaging for the UK, reducing GDP growth by 0.7% in 2025. Given the fiscal climate, the government can ill-afford a reduction in growth if it plans to deliver on its pledges to improve access to healthcare and education (including a major expansion of early years entitlement in 2025).

Although Trump’s ‘trade war’ rhetoric is focused on China and the EU which could mean avoiding the full 20% tariff on exported goods, the UK is unlikely to receive special treatment. While Trump spoke of a UK-US trade deal during his first term, which would likely remove any tariffs, it is unrealistic to expect progress on a deal any time soon. The US has demanded the lowering of regulatory standards on American agricultural imports, such as ‘chlorinated chicken’, which has been a red line for previous governments.

The Starmer government is unlikely to budge on this issue given that the public does not support the lowering of food standards to secure a trade deal. Stephen Moore, a former economic adviser to Trump, has said that the UK must embrace the US economic model and move away from Europe’s “socialist” system, if it wants to agree a trade deal with the US. The Prime Minister has categorically rejected this view. During a speech at the Lord Mayor’s Banquet, he argued that his government does not need to choose between the US or the EU. Instead, Keir Starmer plans to forge closer economic ties with both. However, implementing this strategy will be incredibly difficult if Trump picks a fight with the EU and demands that trade with China is reduced.

Trump’s isolationist instincts will also cause concern. The government’s pledge to raise defence spending to 2.5% of GDP to support the Ukrainian war effort will therefore come under heavy scrutiny. Trump has long expressed frustration with the US’ allies for allowing their defence spending to fall after the Cold War ended, feeling that the US has been left to pick up the bill. Will the new Trump administration be satisfied that the UK is committed to reducing the overreliance on the United States? If not, the Starmer government may need to prioritise defence spending which would limit the government’s room to manoeuvre as it has just raised taxes by £40bn and still remains only just within its fiscal rules. Increased defence spending will make it harder for the government to spend more elsewhere, and get ailing public services back ‘on track’ or make investments that help it to grow the economy.

Pensions reform: Will the Chancellor’s vision become reality?

The Chancellor’s first Mansion House Speech, has made it clear that pensions reform is the first item on the Treasury’s agenda for financial services policy and regulation. Following an autumn budget that caused some business leaders to question the government’s pro-growth agenda, Rachel Reeves’ speech emphasised the important role that pensions reform will play in delivering long-term economic growth.

As expected, Reeves reiterated her intent to pool Local Government Pension Scheme (LGPS) assets into a handful of megafunds. This proposal has been set out in the Pension Investment Review: interim report. The report, published by the Treasury and the Department for Work and Pensions, sets out the initial findings for ‘phase one’ of the government’s review. A consultation on this measure has also been launched alongside the report, offering stakeholders the opportunity to share views on new requirements for pooling and the governance of funds.

The government has also launched a separate consultation on a proposal to set a minimum size limit on Defined Contribution (DC) scheme default funds in the private sector. The government believes that this measure will encourage consolidation and allow savers to be moved more easily from underperforming pension schemes to schemes that deliver higher returns.

The government’s vision for the pooling of schemes has been welcomed by industry trade bodies, given the returns it could generate for savers and the scope it could create for pension funds to invest in longer-term assets. It is no secret that the Chancellor is keen for the UK to mirror the Australian system, where there is greater investment in infrastructure assets.

However, the government will still need to assuage stakeholder concerns about these proposals, given the disruption it could bring to the pensions market. The government will need to balance its own policy goals with market realities. If the government requires a significant portion of pension funds to be invested in the UK, how will industry stakeholders be impacted, given some will view the maximising of returns as their primary objective, rather than investment in British assets?

The government will also need to address concerns around the timeline for implementation. Given the pensions review is still in progress, there remains an opportunity for stakeholders to engage with the government to ensure that proposed policy changes support economic growth, and that the implementation process provides the industry with sufficient time to adjust to the new regime.

The government has announced that the final report of its pensions review will be published in Spring 2025 and that the Pensions Schemes Bill will also be introduced to Parliament shortly afterwards. By this stage, the government will need to have set out a roadmap for its reforms. It will also need to address how, if at all, to mandate the consolidation of the LGPS, and funds in the DC market, and whether new rules will be introduced to regulate pension scheme selection advice and investment consultancy.

These questions highlight the complexity of the task that the Chancellor faces. Despite these challenges, pensions reform remains at the heart of the government’s most important mission – delivering economic growth. The Chancellor’s speech and the newly launched consultations set out further details on the government’s vision for reform. The industry will now have the chance to scrutinise those plans and share its view on how to minimise implementation risks and maximise opportunities for growth.

GK Strategy is a political and regulatory consultancy firm supporting management teams and investors to understand and navigate complex policy changes.

We’d be delighted to share our perspectives on what the government’s pensions 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.

The Dash Review: the future of the CQC

Steve Brine @BrineHealth is a Strategic Adviser at GK Strategy. He was a Health Minister (2017-2019), Government Whip, and is a former chair of the Health & Social Care Select Committee. Here, he reflects on the future regulatory landscape for adult social care.

Context is everything when it comes to social care. Well, almost everything because you can’t forget the politics. On one hand, despite a grand pledge in the Labour Party manifesto to “undertake a programme of reform to create a National Care Service”, we have nothing happening at all.

On the other we have the Dash Review (and now Dash 2.0), the Ten Year Plan, the next phase of the spending review and of course, the Budget which brought a further £600m to prop up the service.

Taken on face value, a national care service is of course a very (very) big deal. This could literally mean the nationalisation of the entire social care sector – akin to how local voluntary hospitals were brought under national public ownership in the 1940s – or it could mean, well, whatever you want it to. Perhaps that’s the point. The truth is, right now, we’re none the wiser and nor I suspect are Ministers.

More immediate, not least for investors and those looking for a little certainty in the sector, is the major NHS Ten Year Plan consultation launched last week. As I understand it, everything is in scope for this programme of work led by Paul Corrigan and Sally Warren with the exception of, wait for it, adult social care. Meanwhile, the Dilnot reforms have been kicked down the road (again) which means the spending cap will now not be introduced next year as planned. Andrew Dilnot is reportedly furious and the great immovable object of NHS reform seems further away than ever before.

What we do know is Penny Dash is in the ascendancy with this government. Shortly after Lord Darzi produced his 163-page diagnosis of the NHS, Dash published her full report into the operational effectiveness of CQC. The Dash review found significant failings in the organisation which it said ’has lost credibility in the health and social care sectors’ and led Wes Streeting to say it was no longer fit for purpose. It found that the CQC’s ability to identify poor performance and support quality improvement has deteriorated and says this has undermined the health and social care sector’s capacity and capability to improve care.

Alongside Dash, a parallel review was led by Prof Sir Mike Richards (former chief inspector of hospitals) looking at CQC’s controversial single assessment framework. Sir Mike (one of the best officials I worked with while a Minister) recommends a fundamental reset of the organisation and a return to the previous organisational structure, with at least three chief inspectors leading sector-based inspection teams at all levels.

And as if that weren’t enough, Dash gets a 2.0 moment as this month we learn the way patient safety is regulated and monitored is to be completely overhauled in England. With the swoosh of a Minister’s pen; the CQC, the National Guardian’s Office, Healthwatch England and local Healthwatch services, the Health Services Safety Investigations Body, the Patient Safety Commissioner and NHS Resolution are all set to be reviewed.

Whatever the future of Henrietta Hughes (the Patient Safety Commissioner) or Helen Vernon (who leads NHS Resolution) one name here is to stay is Julian Hartley. Currently Chief Executive of NHS Providers he will take over as the head of the CQC in December. Julian is a smart appointment. A nice guy (but don’t be fooled) who exudes calm and is fiercely organised. He will find an organisation on its knees and I am sure a massive rebuild on his hands.

It is clear that Penny Dash has listened to the voices of care providers, resulting in a clear set of recommendations so Julian Hartley will benefit from that oven-ready piece of work. Equally, I suspect the Richards review findings will not meet too much resistance. Expect a re-set to a standardised approach to inspections and for line management of such to come back under the auspices of the Chief Inspector of Hospitals. I wouldn’t be surprised to see a completely re-born and re-branded CQC that focuses on safety as well as efficiency, outcomes and use of resources – you can be sure Rachel Reeves will make that a red line.

Ministers will, in my experience, find that the desire to do the Ten Year Plan minus adult social care doesn’t survive contact with political reality. And so between now and the Spring, and indeed the final throes of the comprehensive spending review to come, furious negotiations between DHSC, Angela Rayner (who is responsible for council funding) and HMT are the order of the day.

And when all is said and done, we will find out whether the work of change has great substance or everything looks and feels very familiar.