UK's Former Chancellor Osborne Issues Alarm: Nation at Risk of Falling Behind on Cryptocurrency Front
UK Lags Behind in Crypto Regulation, Warn Industry Experts
The UK's regulatory landscape for stablecoins and cryptocurrencies is currently in a transitional phase, with the Financial Conduct Authority (FCA) proposing a comprehensive regulatory framework for stablecoin issuance, custody, and prudential requirements for cryptoasset firms. However, the lack of finalized rules compared to the US and EU is causing concern among industry voices who fear that the UK may be falling behind in crypto financial innovation and market competitiveness.
The FCA's proposals emphasize the full backing of stablecoins pegged to a single fiat currency by secure, liquid assets held in trust, independent custodianship of backing assets, guaranteed redemption rights at face value, segregation and protection of client cryptoassets by custodians, and enhanced transparency and disclosure obligations for issuers and custodians.
Despite these efforts, the UK has yet to fully implement stablecoin-specific regulations akin to those introduced in other major jurisdictions such as the US and the EU. This delay has raised concerns that the UK is falling behind due to the lack of a clear and finalized regulatory path for stablecoins, while the US (with laws like the 2025 GENIUS Act) and the EU (via the Markets in Crypto Assets regulation effective from end-2024) have already advanced regulatory frameworks.
Former UK Chancellor George Osborne has issued a warning over Britain's approach to crypto, arguing that regulatory caution is costing the country its place in the next wave of financial innovation. Osborne compared crypto's rise to the Big Bang reforms of the 1980s that cemented London's financial dominance. CryptoUK, a digital assets trade group, shares George Osborne's concerns about the UK's approach to crypto.
Callum Mitchell-Clark, co-founder of Alvara Protocol, warns that if the UK keeps dragging its feet, it risks becoming irrelevant while builders and capital head to places like the EU, U.S., or even Dubai. Mitchell-Clark believes that everything feels stuck in consultation mode, and the UK's stance sends a clear message: "we support innovation in theory".
The need to update the system and improve society is not a political statement, according to Coinbase CEO Brian Armstrong. Armstrong responded to the ban of a Coinbase ad that showed the financial system collapsing like a crumbling ceiling, stating that if an ad cannot be aired, there must be a kernel of truth in it.
Industry experts are pressing for broader access to crypto-linked investment products and continue to inform, educate, and address policymakers to shift the debate. Su Carpenter, director of operations at CryptoUK, calls for the recognition of stablecoins in UK law and fairer banking policies for digital asset companies. Carpenter states that the lack of recognition of the tax framework has inhibited economic growth in the crypto sector.
Bank of England Governor Andrew Bailey had earlier warned that stablecoins should not replace traditional money. However, the slow regulatory progress may cause the UK to lose market relevance and financial innovation opportunities, particularly as other currencies like the USD and euro dominate tokenized settlements and financial liquidity. This delay could result in the UK becoming financially irrelevant in the digital assets space and losing ground to jurisdictions that have embraced stablecoin innovation under clear regulatory certainty.
In his op-ed, Osborne singled out the Bank of England's stablecoin policy as a roadblock to innovation. The UK's current stance on crypto regulation may lead to a loss of innovation and investment, according to industry voices. With the FCA data showing that 12% of UK adults now hold crypto, up from 10% in 2022, it is crucial for the UK to take a more proactive approach to crypto regulation to remain competitive in the global market.
References:
[1] FCA Consultation Paper on Stablecoins (2025) [2] The 2025 GENIUS Act (US) [3] Markets in Crypto Assets regulation (EU) [4] FCA's 2023 Crypto Regime [5] George Osborne's Op-Ed on the UK's Approach to Crypto (2025)
- The UK's Financial Conduct Authority (FCA) is currently proposing a regulatory framework for stablecoin issuance, custody, and prudential requirements for cryptoasset firms, but concerns about the lack of finalized rules compared to the US and EU are growing among industry voices.
- The FCA's proposals for stablecoins require full backing by secure, liquid assets, independent custodianship, guaranteed redemption rights, segregation and protection of client assets, and enhanced transparency and disclosure obligations.
- The UK has yet to implement stablecoin-specific regulations like the US's 2025 GENIUS Act or the EU's Markets in Crypto Assets regulation, raising concerns that the country is falling behind in crypto financial innovation and market competitiveness.
- Former UK Chancellor George Osborne has warned that regulatory caution is costing the UK its place in the next wave of financial innovation, likening crypto's rise to the Big Bang reforms of the 1980s that cemented London's financial dominance.
- Callum Mitchell-Clark, co-founder of Alvara Protocol, suggests that if the UK continues to delay in crypto regulation, it risks becoming irrelevant as builders and capital head to places with clearer regulatory paths, like the EU, US, or Dubai.
- Industry experts, such as the CEO of Coinbase, Brian Armstrong, are pressing for broader access to crypto-linked investment products and call for policymakers to shift the debate towards recognition of stablecoins in UK law and fairer banking policies for digital asset companies.
- With the UK's stance on crypto regulation potentially leading to a loss of innovation and investment, financial experts argue that it is crucial for the UK to take a more proactive approach to crypto regulation to remain competitive in the global market, as shown by the growing interest in cryptocurrencies among UK adults.
