Is it crypto time in the UK?

Put the multi-billion crypto correction to one side for a moment and it looks like the digital asset industry in the UK will end the year on a high. The government is hoping to align its rules with the US, the FCA is delivering on its regulatory roadmap, and there are even some crypto listings on the London Stock Exchange thanks to our own client, KR1.

Compared to a year ago, the industry was facing an entirely different picture. Not much movement from the regulators, not much interest from US companies and not much morale. The dream of becoming a global crypto asset hub was fading and fast.

But since then, the Chancellor Rachel Reeves backed the industry in her Mansion House speech, the FCA has published a plethora of consultations and launched industry sandboxes, while the Bank of England has even changed its tune on stablecoins – now the central bank backs the financial instruments which ‘peg’ digital assets such as the US Dollar, Euro or Pound Sterling.

The narrative has subsequently changed. There is now more talk in the City that the UK can be a beneficiary of second mover advantage. That’s to say other countries have experimented with regulating or liberalising the industry in their own way. The EU’s MiCA Act and the US’ Genius Act are prime examples, with Brussels hoping to be a super-regulator of digital assets while the US eradicates red tape around crypto.

With Brexit behind it, the UK is increasingly finding a middle way. After initially taking a paternalistic approach, including banning retail investors from digital asset tracking vehicles, the government and regulators now talk of economic growth and business support.

This means that Britain can absorb the best bits from crypto legislation abroad, whilst avoiding the pitfalls others have had to face and overcome.

To paraphrase James Todd Smith, aka LL Cool J, don’t call it a comeback, the industry has been here for years.