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.