UK Crypto Hub Ambitions at Risk Due to Regulatory Deadlock

The U.K.’s bid to become a leading global digital-asset hub is being throttled by political inertia and regulatory infighting, industry figures warn — risking the migration of next‑generation crypto infrastructure to friendlier jurisdictions. Jonny Fry, blockchain and banking researcher, founder of Digital Bites and CEO of TeamBlockchain Ltd., told CoinDesk that despite public reassurances from the Financial Conduct Authority (FCA), behind-the-scenes legislative friction and divided responsibilities are slowing the rollout of a unified crypto framework. That delay, he said at the Digital Money Summit 2026 in London, could cost the U.K. far more than a handful of firms relocating. “The real risk is not that firms physically leave Britain,” Fry said. “The risk is that the next generation of digital asset infrastructure is built somewhere else.” The root problem, according to Fry and other insiders, is institutional fragmentation. HM Treasury, the Bank of England and the FCA are effectively competing over who sets the rules for tokenised payments, stablecoins and central bank digital currency (CBDC). Treasury wants to legislate; the FCA is focused on regulation and public testing regimes; and the Bank of England is cautious about monetary stability and any digital‑pound rollout. That fractured approach, Fry warns, creates operational uncertainty around the “singleness of money” when tokenised deposits and digital assets interact. Practical consequences are already visible. Several high‑profile digital-asset firms have opted to relocate to jurisdictions that offer clearer, faster rules. Fry pointed to crypto derivatives exchange Deribit as a notable example: “Had we had the regulatory clarity that staking your crypto was not a collective investment scheme, maybe Deribit would have relocated here in the U.K.,” he said, adding that the missed opportunity cost the U.K. government “hundreds of millions in tax revenues” following Coinbase’s acquisition of the platform. Voices in the market say the direction of policy is broadly sensible but moving too slowly. Andrew MacKenzie, CEO of sterling stablecoin developer Agant, told CoinDesk earlier that while regulations are trending the right way, the pace will not support the U.K.’s hub ambitions if it remains sluggish. The Bank of England’s cautious stance has been singled out as a significant bottleneck. A recent Financial Times piece argued that the central bank’s tight restrictions on stablecoins — and its general wariness about crypto — are slowing business integration with the payments system. The FCA, caught between Downing Street priorities and the Bank’s monetary concerns, has emphasized controlled testing environments rather than publicly airing its frustrations. From the FCA’s perspective, rollout is deliberate and modular. Matthew Long, Director of Payments and Digital Assets at the regulator, told CoinDesk the regime is “open for business” and that firms are being encouraged to apply, with pre‑application support available. “So what I’m saying to firms is it’s open for business,” he said. But Fry cautions that without regulatory agility, capital and liquidity will flow to where rules are clearer and markets are more fluid — most likely to U.S.-dollar‑backed stablecoins. “We’ll end up seeing dollarisation,” he warned. U.K. regulations for digital assets are currently slated to come into effect in October 2027. With that deadline on the horizon, industry leaders say the government must resolve inter-agency friction quickly if it wants to keep the infrastructure, innovation and tax revenue that a competitive crypto hub would bring.