The UK's ambiguous stance on digital asset regulation is drawing sharp criticism from market participants, with some pointing out that "policy delays" are a key reason the country is falling behind the EU and the US in defining digital finance.
In a blog post on Friday, John Orchard, chair of the Digital Currency Research Institute at the independent think tank OMFIF, and editor Lewis McLellan argued that the UK has squandered its first-mover advantage in the distributed ledger technology (DLT) financial sector.
The article titled "The UK Continues to Miss Opportunities in DLT Finance" notes that the UK was expected to set a gold standard for cryptocurrency regulation post-Brexit but continues to "speak vaguely about future regulation."
"Currently, the date for the 'institutional effectiveness' section of the UK Financial Conduct Authority's (FCA) 'crypto roadmap' is conspicuously absent, although it suggests it may be after 2026," Orchard and McLellan wrote.
The EU's Markets in Crypto-Assets Regulation (MiCA) framework has already come into effect, while the US Senate recently passed the Guiding and Establishing the National Innovation of Stablecoins Act (GENIUS Act), a landmark bill establishing a federal regulatory framework for stablecoins.
However, the UK FCA has yet to confirm the effective date of its cryptocurrency regime. "The lack of a viable framework hinders the UK's ability to adapt to the potential of fully on-chain finance," the authors wrote.
Criticism has also focused on the UK's treatment of stablecoins. Unlike the US, which views stablecoins as independent payment instruments through the GENIUS Act, UK regulators categorize them alongside crypto investment assets, a move that has left the market "confused."
The Bank of England's initial stance has further deepened concerns. Its draft framework requires systemic stablecoins to be fully backed by central bank currency—an industry participant believes this condition would make issuance commercially unviable. Although the Bank of England has since begun to relax this position, it has yet to provide a workable model.
Meanwhile, other jurisdictions are making progress. In May, Hong Kong passed a stablecoin bill and is rapidly developing a tokenized ecosystem through its "Ensemble project" initiative.
The authors also praised the Virtual Assets Regulatory Authority (VARA) of the United Arab Emirates, noting its standout performance as a dedicated digital asset regulatory body, while the UK attempts to adapt traditional institutions to new financial models.
The blog concluded that although the UK led fintech innovation in the 2010s and still benefits from advantages such as its time zone, language, and legal system, its position is far from secure. "Financial centers rise and fall," the authors warned, urging regulators to take swift action.
Related: Paybis: Despite Trump’s support, cryptocurrencies still choose MiCA over the US
Original: “Opinion: ‘Policy Delays’ Cause the UK to Lag Behind the EU and the US in Cryptocurrency Regulation”
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