UK Faces Criticism Over Delayed Digital Asset Regulations

According to Cointelegraph, the United Kingdom's ambiguous regulatory approach to digital assets is facing sharp criticism from industry participants. Many attribute the country's lag in defining digital finance to "policy procrastination," which has resulted in the UK falling behind both the European Union and the United States. In a blog post dated June 20, John Orchard, chairman, and Lewis McLellan, editor of the Digital Monetary Institute at the Official Monetary and Financial Institutions Forum (OMFIF), highlighted that the UK has squandered its early advantage in distributed ledger finance. The post, titled "The UK keeps missing the boat on DLT finance," pointed out that the UK was once anticipated to establish a post-Brexit gold standard for crypto regulation but continues to discuss regulation in vague terms for the future. The European Union has already implemented its Markets in Crypto-Assets (MiCA) framework, while the US Senate recently passed the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, which sets federal guidelines for stablecoins. Despite these advancements, the UK's Financial Conduct Authority has yet to confirm a go-live date for its crypto regime. Orchard and McLellan noted that this lack of a workable framework hinders the UK's ability to adapt to the potential shift of finance moving on-chain. The criticism extends to the UK's handling of stablecoins, which are treated as investment assets rather than distinct payment tools, unlike the US approach under the Genius Act. This decision has puzzled market participants. The Bank of England's initial stance further exacerbated concerns, as its draft framework required systemic stablecoins to be fully backed by central bank money—a condition deemed commercially unviable by industry players. Although the Bank has started to relax this position, it has yet to present a feasible model. Meanwhile, other jurisdictions are progressing with their crypto regulations. In May, Hong Kong passed a stablecoin bill and is swiftly developing 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 it with the UK's attempt to adapt legacy institutions to new financial models. The blog concluded by noting that while the UK led fintech innovation in the 2010s and still enjoys advantages such as its time zone, language, and legal system, its position is not secure. "Financial centers come and go," the authors cautioned, urging regulators to take swift action to maintain the UK's standing in the global financial landscape.