The UK’s ambitions to become a dominant global hub for digital assets are running into a wall of political inertia and regulatory gridlock, global banking and blockchain researcher Jonny Fry, founder of Digital Bites and CEO of TeamBlockchain Ltd, told CoinDesk.
Despite external assurances of progress from the Financial Conduct Authority (FCA), industry experts suggest that persistent bureaucratic barriers and legislative friction behind closed doors are seriously delaying the implementation of a unified crypto framework. The slow progress is raising growing concerns that Britain is ceding critical economic ground to the regimes in Washington and Brussels.
Fry said the UK should worry about other, more critical issues. “The real risk is not that companies physically leave Britain,” he said. “The risk is that the next generation of digital asset infrastructure will be built elsewhere.”
The concern at the 2026 Digital Money Summit in London reflects a deep-rooted institutional divide. While the private sector demands rapid execution to unlock massive market efficiencies, a web of divided powers between HM Treasury, the Bank of England and the FCA has severely fractured payment and investment perimeters.
“We have a situation right now where the Treasury is looking to lay down the law, and then we have the FCA looking to have publicly issued stablecoins and a digital pound issued by the Bank of England,” Fry noted.
He warned that this fragmented approach creates deep operational uncertainty, complicating how the jurisdiction handles the “oneness of money” between tokenized deposits and digital assets.
This administrative friction has pushed several high-profile digital asset firms to leave the UK entirely and opt to relocate to jurisdictions with immediate regulatory clarity. Fry cited crypto derivatives exchange Deribit as a prime example.
“If we had had regulatory clarity that staking your cryptocurrency was not a collective investment scheme, perhaps Deribit would have moved here in the UK,” Fry said, estimating that the missed opportunity cost the UK government hundreds of millions in tax revenue following Coinbase’s acquisition of the platform.
Andrew MacKenzie, CEO of sterling stablecoin developer Agant, told CoinDesk in February that he believed regulations were moving in the right direction, but were moving too slowly to support its global digital asset hub ambitions.
The Bank of England’s cautious and slow approach to cryptocurrencies is hugely frustrating the private sector, a Financial Times article claimed last week, adding that while companies are pushing for rapid integration, the central bank’s strict restrictions on stablecoins have created a huge regulatory bottleneck.
The FCA, caught between Downing Street’s political priorities and the Bank of England’s oversight of monetary stability, has preferred to emphasize its controlled testing environments rather than publicly venting its operational frustrations.
Matthew Long, Director of Payments and Digital Assets at the FCA, took a more positive approach to the pace at which regulations are being adopted, presenting the timeline as a calculated modular implementation designed to build a bulletproof regime.
“So I think we have created a comprehensive regime that is open for business right now. We are encouraging companies to apply,” he told CoinDesk. “We have our pre-application support service available, so what I tell businesses is that it is open to the public.”
However, if UK regulators do not act with genuine market agility, liquidity will inevitably flow to where capital is most fluid, Fry warned. Without a competitive alternative to the digital pound, private traders will simply settle transactions using dominant stablecoins backed by the US dollar.
“We will end up seeing dollarization,” Fry warned.
The UK regulations will come into force in October 2027.
