London’s Zebu Live conference buzzed with a familiar tension this week. Industry leaders gathered, eager to discuss the future of digital assets, but a shadow loomed: the UK’s regulatory landscape. Many in the crypto space feel a clear framework is long overdue. They are also frustrated by the slow pace of progress from financial watchdogs.
- Industry leaders at London’s Zebu Live expressed frustration with the UK’s slow and “heavy-handed” regulatory approach to digital assets, which they believe has cost the country its position as a crypto hub.
- While the UK is developing a comprehensive crypto regulatory framework expected by 2026, the US has adopted a swifter, more pro-innovation stance, encouraging UK policymakers to learn from its approach.
- Despite criticisms, recent moves like lifting the ban on crypto exchange-traded notes and growing political support suggest a warming attitude towards the crypto industry in the UK, with potential for significant market growth.
Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, did not mince words. He told The Block that Consensys remains concerned about the Financial Conduct Authority (FCA) being “heavy-handed” in its oversight. This approach, he believes, has cost the UK dearly. It has, in his view, lost its position as a crypto hub to the United States.
“Deciding that everything in crypto is a financial instrument subject to all the applicable rules really hampers UK competitiveness,” Hughes explained. Consensys is no small player. It is a blockchain software firm behind popular platforms like MetaMask, the Ethereum Layer 2 Linea, and Infura. Yet, despite its UK presence, Hughes confirmed that neither the FCA nor any political figures have reached out for their input on crypto policy.
Hughes urged policymakers to look beyond the immediate risks. He sees immense potential for blockchain technology to benefit society. He fears that “putting it behind the iron gates of traditional financial regulations will keep the UK from leading the pack.” It is a sentiment many in the industry echo.
During a panel discussion at the conference, Colin Payne, the FCA’s Head of Innovation, faced direct criticism. Representatives from Kraken, Coinbase, and the UKUS Crypto Alliance argued that the UK’s cautious stance risks stifling innovation. They worry it could drive firms to friendlier shores. Mr. Payne, however, stood firm. He stressed the FCA’s duty to protect consumers and build long-term trust. He spoke of evidence-based policy. He added that the regulator “won’t apologize for being cautious,” especially after past market collapses highlighted the need for prudence.
The Tale of Two Approaches: UK Versus US
The UK has taken a phased approach to crypto regulation. Its stated goal is to become a global hub for digital assets. At the same time, it prioritizes consumer protection and financial stability. For five years, UK-based crypto firms have needed to register with the FCA. This ensures compliance with anti-money laundering (AML), counter-terrorism financing (CTF), and know-your-customer (KYC) rules. The regulator’s current powers focus on financial promotions and preventing financial crime. Just recently, the FCA filed a lawsuit in the High Court against entities linked to crypto exchange HTX. The suit alleges unauthorized promotion of cryptocurrencies to consumers.
The United States, by contrast, has adopted a swifter, more crypto-friendly approach. This shift began under President Donald Trump. It has increased pressure on Britain to respond with a more comprehensive framework. “The starkest difference is between the UK and the U.S.,” Hughes observed. “Whereas in the U.S. there is a real desire to give blockchain technology the room to breathe and advance, the tone in the UK is much different, focusing instead on risks and uncertainties.” He believes pro-innovation policies will ultimately prove to be the wisest path.
When asked what kind of regulatory framework would best support blockchain innovation in the UK, Hughes again pointed to the US. He highlighted its recent federal stablecoin legislation and ongoing market-structure efforts. “Take notes on what is happening in the U.S. right now and follow along,” he advised. He hopes this might reverse the trend of technologists shifting their focus away from the UK.
A Glimmer of Light: UK Policymakers and Regulators Warm Up
Despite the criticisms, there are signs of change. Last year, the UK government unveiled plans for a full crypto regulatory framework. This framework will cover stablecoins, trading platforms, lending, staking, and custody. These comprehensive regulations are currently under consultation. Full implementation is expected sometime in 2026. “It feels like 2026 is definitely going to be the year when the framework is put out there,” Daniel Slutzkin, Head of UK at Gemini, told The Block. “But whether it’s January or December, or sometime in between, no one really knows.”
Slutzkin noted that many people are waiting for this regulatory clarity. They want a “stamp of approval” before diving into crypto. “It’s good for investors to see. It’s good for companies to be able to say we are regulated, and to be able to hold their heads up a bit higher when they are marketing products.” This clearer path toward comprehensive crypto regulation is what the industry has requested for years. Bivu Das, Kraken UK Managing Director, spoke of covering the “nuts and bolts” of market structure. “But we need to move faster, and we need to be brave on the things that we know will make a difference,” he urged. He sees “light at the end of the tunnel to do this relatively quickly.”
One notable restriction the FCA did lift recently was a four-year ban on crypto exchange-traded notes (ETNs) for UK retail users. This move immediately spurred action. BlackRock, 21Shares, Bitwise, and WisdomTree were among the first to list Bitcoin or Ethereum investment products on the London Stock Exchange. This happened just days after the ban was lifted. However, the broader ban on crypto asset derivatives for retail investors remains in place.
This lifting of the ETN ban is a significant step. UK investment firm IG Group suggests the country’s crypto market could see 20% growth as a result. This move brings the UK more in line with the US. A survey by IG Group found that 30% of UK adults would consider investing in crypto via ETNs. This is a sharp rise from the current crypto ownership levels of 12%, according to the FCA’s own research.
This growing pro-crypto sentiment among the electorate is also finding support from political figures. Nigel Farage, leader of Reform UK, has become a prominent champion for the industry. At Zebu Live, he reiterated his pledge to “bring in digital assets and crypto from the cold.” Reform UK is currently polling well, though the next general election is not due until 2029. If elected, the right-wing populist party plans to introduce a Crypto Assets and Digital Finance Bill. This could include creating a “bitcoin digital reserve” in the Bank of England. It also proposes reducing capital gains tax from 24% to 10%. Furthermore, it aims to make it illegal for banks to close customer accounts simply for sending or receiving funds from crypto exchanges or trading legal cryptocurrencies.
Across the political spectrum, positive tones are emerging. Gurinder Singh Josan CBE MP, Labour co-chair of the UK’s Crypto and Digital Assets All Party Parliamentary Group, spoke in the House of Commons. He noted that over 8 million UK citizens now hold cryptocurrency and digital assets. “The UK has the potential to be the world leader in this field, supporting our growth mission,” he stated. He called for rapid government action to regulate the sector. The regulatory dance continues, but the music seems to be changing tempo.
