Britain is making a fresh pitch to become a global crypto hub, but faces a tough road ahead amid criticism from local entrepreneurs and U.S. competition under President-elect Donald Trump.
Britain’s Labour government has committed to making the country an accommodative environment for businesses engaged in crypto and blockchain-related activities.
In a recent speech, U.K. Economic Secretary to the Treasury Tulip Siddiq said the government aims to engage firms on draft legal provisions for digital assets including stablecoins — tokens pegged to the value of sovereign currencies — “as early as possible next year.”
She also said the government wouldn’t approach crypto staking services, which offer rewards on users’ token holdings, as collective investment schemes. Crypto industry insiders had worried such a treatment would have created burdensome regulatory requirements.
“This is a sector with enormous potential and a sector that’s already playing a central role in the U.K.’s vibrant tech landscape,” Poppy Gustafsson, Britain’s investment minister, said last week at an event organized by the U.K. division of Coinbase-backed advocacy group Stand With Crypto.
Gustafsson said the government is “committed to fostering and embracing blockchain” and is “already taking decisive steps to support this sector and ensure that we remain at the forefront of this global innovation.”
One example she cited was the launch of the Digital Securities Sandbox, a testbed for developing new distributed ledger technology-based solutions for the issuance, trading and settlement of securities in a live regulated environment.
Another example is the “digital gilt” pilot launched last month, which looks to issue U.K. government bonds on the blockchain.
While Britain is pushing forward a number of regulatory proposals on crypto, not everyone’s convinced it can become a globally significant place for the technology.
“I don’t know whether we have the policymakers, the government, the risk appetite, the pro-entrepreneurship attitude to really capitalize on this generational opportunity,” Steven Bartlett, a British entrepreneur famous for his “Diary of a CEO” podcast series, said in a fireside discussion at the Stand with Crypto event.
Bartlett said that spending time at both the San Francisco and London offices of his blockchain startup Thirdweb makes him think “it’s really unfair to try and build a company here compared to being there.”
Data from the U.K.’s Financial Conduct Authority suggests there’s growing demand for crypto products in the country — the average value of crypto held by Brits rose to £1,842 ($2,337) this year from £1,595 a year ago, according to a survey released by the regulator last month.
The FCA also published a roadmap detailing its plan to implement regulation for the crypto industry. The watchdog will launch discussion papers on stablecoins, trading platforms, lending, and staking over the next two years, with a full regulatory regime slated to go live by 2026.
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