The UK’s ambiguous regulatory position on digital assets is receiving significant criticism from market players, with some attributing “policy delay” as a primary factor for the nation lagging behind both the European Union and the US in the initiative to shape digital finance.
In a blog post released on Friday, John Orchard, chairman, and Lewis McLellan, editor of the Digital Monetary Institute at the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank, contended that the UK has squandered its initial advantage in distributed ledger finance.
The article, titled “The UK keeps missing the boat on DLT finance,” asserted that the UK, previously anticipated to establish a post-Brexit gold standard for crypto regulations, remains focused on “vaguely discussing regulation in the future.”
“Currently, there is a date noticeably absent for the ‘Regime go-live’ aspect of the Financial Conduct Authority’s ‘Crypto Roadmap,’ but it implies some time after 2026,” Orchard and McLellan noted.
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EU and US implement crypto regulations
The European Union’s Markets in Crypto-Assets (MiCA) framework is already operational, while the US Senate recently approved the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, a groundbreaking bill that sets federal regulations for stablecoins.
Nevertheless, the UK’s Financial Conduct Authority still does not have a confirmed implementation date for its crypto regime. “This lack of an actionable framework hinders the UK’s ability to adjust to the likelihood that… all finance is transitioning onchain,” the authors stated.
The critique further emphasizes the UK’s stance on stablecoins. In contrast to the US, which categorizes them as separate payment instruments under the Genius Act, UK regulators have categorized them with crypto investment assets, a decision that has “bewildered” the market.
The Bank of England’s initial position only amplified concerns. Its draft framework mandated that systemic stablecoins be entirely backed by central bank currency — a stipulation that industry experts argued would render issuance commercially unfeasible. Although the Bank has started to soften this stance, it has yet to present a viable model.
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Jurisdictions proceed with crypto regulations
On the other hand, other regions are making advancements. In May, Hong Kong approved a stablecoin bill and is rapidly fostering a tokenization ecosystem through its Project Ensemble initiative.
The authors also commended the United Arab Emirates’ Virtual Assets Regulatory Authority (VARA) for being a dedicated digital asset regulator, contrasting with the UK’s effort to modify traditional institutions for new financial frameworks.
The blog concluded that although the UK spearheaded fintech innovation in the 2010s and still enjoys advantages such as its time zone, language, and legal system, its standing is far from secure. “Financial centers can rise and fall,” the authors cautioned, prompting swift action from regulators.
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