The U.K.’s ambitions to become a dominant global digital asset hub is running into a wall of political inertia and regulatory gridlock, Jonny Fry, a blockchain and global banking researcher, founder of Digital Bites and CEO at TeamBlockchain Ltd., told CoinDesk.
Despite outward assurances of progress from the Financial Conduct Authority (FCA), industry insiders suggest that nagging bureaucratic barriers and legislative friction behind closed doors are severely delaying the implementation of a unified crypto framework. The slow progress is creating rising concern that Britain is conceding critical economic ground to regimes in Washington and Brussels.
Fry said the U.K. should worry over other more critical issues. “The real risk is not that firms physically leave Britain,” he said. “The risk is that the next generation of digital asset infrastructure is built somewhere else.”
The concern on the floor of the Digital Money Summit 2026 in London reflects a deep-seated institutional divide. While the private sector demands swift execution to unlock massive market efficiencies, a web of divided remits between HM Treasury, the Bank of England and the FCA has severely fractured the payment and investment perimeters.
"We have a situation at the moment whereby the Treasury is looking to set the law, and then we're having the FCA looking to have publicly-issued stablecoins and a Bank of England-issued digital pound," Fry noted.
He warned that this fragmented approach creates deep operational uncertainty, complicating how the jurisdiction handles the "singleness of money" across tokenized deposits and digital assets.
This administrative friction has pushed several high-profile digital asset firms to abandon the U.K. entirely, choosing to relocate to jurisdictions with immediate regulatory clarity. Fry cited the crypto derivatives exchange Deribit as a prime 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.," Fry said, estimating that the missed opportunity cost the U.K. government hundreds of millions in tax revenues following Coinbase’s acquisition of the platform.
Andrew MacKenzie, CEO of sterling stablecoin developer Agant, told CoinDesk in February he believed that regulations were moving in the right direction, but were moving too slowly to support its global digital asset hub ambitions.
The Bank of England’s cautious, slow approach to crypto is heavily frustrating the private sector, a Financial Times article stated last week, It added that while businesses are pushing for fast integration, the central bank’s tight restrictions on stablecoins have created a massive regulatory bottleneck.
The FCA, caught between Downing Street's political priorities and the Bank of England's watchfulness on monetary stability, has preferred to emphasize its controlled testing environments rather than publicly vent its operational frustrations.
Matthew Long, Director of Payments and Digital Assets at the FCA, took a more positive approach to the pace at which regulations are being adopted, presenting the timeline as a calculated, modular rollout designed to build a bulletproof regime.
"So I think we've delivered a comprehensive regime that's open for business right now. We're encouraging firms to apply,” he told CoinDesk. “We've got our pre-application support service available, so what I'm saying to firms is it's open for business."
However, if U.K. regulators do not move with genuine market agility, liquidity will inevitably default to where capital is most fluid, Fry warned. Without a competitive digital pound alternative, private operators will simply settle transactions using dominant U.S. dollar-backed stablecoins.
"We'll end up seeing dollarisation," Fry warned.
U.K. regulations are set to come into effect in October 2027.