- The UK is facing criticism for delays in its digital asset regulatory framework.
- The EU and US have already set clear crypto rules, putting the UK at a disadvantage.
- Industry experts say unclear UK regulations could harm its competitiveness in digital finance.
- Other global jurisdictions like Hong Kong and the UAE are advancing with dedicated crypto regulations.
- Experts urge UK regulators to act quickly to maintain London’s role as a global financial center.
The United Kingdom is under scrutiny from market participants over its slow progress in establishing regulations for digital assets, according to a recent blog post from the Official Monetary and Financial Institutions Forum (OMFIF). The post, published on Friday, warns that unclear policies are causing the UK to fall behind the European Union and United States in the fast-growing area of decentralized finance.
The OMFIF article, written by chairman John Orchard and Digital Monetary Institute editor Lewis McLellan, highlights that the Financial Conduct Authority (FCA) has not set a clear start date for its new crypto regulatory regime. In contrast, the EU’s Markets in Crypto-Assets (MiCA) framework is now active, and the US Senate has passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, providing clear federal guidelines for stablecoins.
OMFIF’s authors state that the UK’s lack of a detailed timeline and “policy procrastination” are holding back its ability to adapt to changes in the financial world. “As it stands, there is a date conspicuously missing for the ‘Regime go-live’ portion of the Financial Conduct Authority’s ‘Crypto Roadmap,’ though it suggests some time after 2026,” Orchard and McLellan wrote. The report also criticizes the UK’s decision to group stablecoins with other crypto investment assets, unlike the US approach under the GENIUS Act, which treats them as specific payment tools.
The Bank of England’s early draft policies required stablecoins with significant impact in the market, called systemic stablecoins, to be backed only by central bank money. Industry leaders argued that this requirement would make such stablecoins too difficult to issue or use. Although the Bank of England has relaxed its position, it has not yet released an alternative regulatory model.
In May, Hong Kong passed technology-focused regulations for stablecoins and is launching new tokenization projects, such as Project Ensemble. The United Arab Emirates also received recognition from OMFIF for its dedicated Virtual Assets Regulatory Authority (VARA), which focuses solely on digital assets, unlike UK agencies adapting older frameworks for new technologies.
OMFIF’s report concludes that while the UK still has benefits such as favorable time zones and legal infrastructure, its place as a global finance hub is not guaranteed. “Financial centers come and go,” the authors noted, advising UK regulators to act promptly to close the regulatory gap in digital finance.
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