The UK government is set to establish a "UK–US Financial Regulatory Working Group" to explore the creation of a "transatlantic sandbox for digital securities." This new initiative seeks to encourage innovation, as well as the need to work through the regulatory challenges that our fast-paced crypto market presents. The UK has ambitions to cement its position as a leading global hub for digital assets. It provides a thoughtful approach to ensuring strong regulation while advancing regulatory goals through technological innovation and creativity.

The UK's Financial Conduct Authority (FCA) has already been involved with crypto for some time, according to Jannah Patchay, Executive in Residence at Global Digital Finance. Now, the FCA is being instructed to shape up under the incoming Labour administration.

UK regulation will enter a new regime at the end of 2026. Businesses might have to go through the registration process, which could take as long as two years thereafter. This timeline should serve to highlight just how difficult it is to create a cohesive, all-encompassing regulatory regime for digital assets.

"it's going to be super-expensive to comply" - Charles Kerrigan, partner at CMS

Charles Kerrigan noted that policymakers were initially hesitant to regulate crypto "because it would make it look legitimate." More than seven million adults in the UK currently hold crypto. This unprecedented growth further underscores the dire need for clear, common sense and enforceable regulation.

>Rachel Reeves’ draft legislation aims to strike a balance between "cracking down on bad actors while supporting legitimate innovation." This approach reflects a broader recognition that regulation must be carefully calibrated to avoid stifling the potential benefits of digital assets.

To Anya Markitanova, Counsel for Institutional Partnerships at Archax, a regulated digital assets exchange, the dividing line between retail and institutional players in the crypto space couldn’t be clearer. She argues for creating tailored regulatory frameworks for each cohort. The UK government held a consultation in 2019 on regulating crypto, but then “six years went by and nothing happened.”

As Alex Ball stated, the UK has arguably become the fastest-growing crypto market in the world. This rapid growth underscores the urgency for a well-defined regulatory framework that can provide clarity and certainty for businesses and investors alike.

Charlies Kerrigan warned against the notion that one country can simultaneously be “the most innovative” and “the safest.” He thinks this idea is a dangerous distraction.