Analysis paralysis - how the UK is missing the crypto revolution
Bradshaw Principal Economist, Matt Latham, argues that the UK has the talent and institutions to lead in blockchain and digital assets, if only it had the direction.
A few years ago, the UK looked as though it could become one of the world’s main centres for crypto and blockchain. London was home to early work by Ethereum and other major projects. The City had the right foundations: deep financial expertise, a long history of global transaction processing, and a legal system trusted around the world. English common law has always fitted well alongside other systems, which gave the UK a natural edge for building the next generation of financial infrastructure.
Public institutions were also ahead of the curve. The Law Commission and Sir Geoffrey Vos clarified how English law applies to digital assets and smart contracts. There was momentum in Whitehall and the Bank of England.
Now, however, progress has slowed. Other countries are setting clear rules and moving quickly, while the UK is still debating the basics.
The global shift
The US has passed national legislation for stablecoins, giving firms legal certainty about how to issue, back, and use them. That clarity is already turning into products. Banks and asset managers are bringing tokenised versions of government bonds and money-market funds onto public blockchains. BlackRock’s $3 billion and total tokenised real-world assets have grown to around $35 billion.
In Europe, the MiCA framework is fully in force, encouraging banks to develop euro-denominated stablecoins and tokenised payment systems.
These changes are pulling crypto firmly into the mainstream. New laws and products are turning it from a speculative side-market into a functional part of how finance operates, supporting faster settlement, 24/7 payments, programmable transactions, and new ways of posting and moving collateral. Given the scale of global financial flows, even small efficiency gains could have very large economic effects.
Why the UK should matter
The City of London has been the world’s financial plumbing for centuries. It leads global foreign-exchange trading and financial-services exports. If trillions of pounds in assets and payments are going to be processed on new digital rails, the UK should be a hub for that activity.
Beyond the technology itself lies a wide services industry: custody, compliance, data, auditing, treasury management, and legal advice. Those are exactly the areas where the UK already excels. Capturing even a modest slice of the new market could mean billions of pounds in additional high-value exports each year.
What’s holding us back?
Right now, the UK debate is being led almost entirely by regulators. Every headline is about their concerns (financial stability, consumer protection, the risk of speculation), with no news on how the country is going to take advantage of the opportunity.
Government, for its part, has become a spectator. There are all the usual signals of activity - an APPG, a new taskforce - but these bodies rarely deliver tangible results, creating the appearance of action while the real policy energy still sits with the regulators, whose core job is to limit risk, even if they have been provided with ‘growth missions.’
The Transatlantic Taskforce for Markets of the Future, launched this year by HM Treasury and the US Treasury, is a good example. On paper, it’s meant to align UK and US thinking on digital assets, tokenisation and the next generation of capital markets. In practice, it looks more like a coordination forum than a strategy. Its discussions with industry have been constructive, but until the UK has its own clear domestic framework, which effectively coordinates relationships between HMT, the Bank of England, FCA and PRA, there isn’t much to align with. The US can come to the table with new legislation and live products; the UK turns up with consultations.
The FCA’s cautious stance has made it difficult for retail exchanges to operate. Binance stopped taking new UK customers. Revolut has struggled to expand its crypto products. Kraken’s co-chief executive told the Financial Times that British users are confronted with “cigarette-box warnings” and can’t access many of the features available in the US.
The Bank of England’s proposal to cap how much stablecoin individuals and businesses can hold is another example. No other major jurisdiction is proposing this, and there’s no timetable for removing the cap. As Lord Vaizey pointed out in the Lords, this kind of policy uncertainty makes the UK a less attractive place to build.
Bradshaw Advisory’s Senior Adviser and former Second Permanent Secretary at the Department for Business and Trade, Sir Crawford Falconer, put it bluntly:
“We seem to be suffering paralysis by analysis. Others like the EU and the US have managed to weigh the risks but still get their act together. We haven’t. If we don’t do the same, and fast, others will be eating our lunch and our financial services industry will be eating their dust.”
Without stronger political direction, these scattered efforts add up to caution rather than strategy. The UK risks being the country that hosts working groups while others host the markets.
The scale of what we’re missing
Stablecoins and tokenised assets are already handling hundreds of billions of dollars in transactions. Large global banks are building systems to use them for payments, settlement, and collateral. Every country that gives clear, proportionate rules is positioning itself to host this new infrastructure and the jobs and revenues that go with it.
If we continue to hesitate, the UK will end up importing these services rather than exporting them.
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