The UK is currently lagging behind the EU and US in the implementation of its crypto regulatory framework, with the full effect of the Financial Services and Markets Act expected only by 2026, according to market experts. This delay has contributed to ongoing market volatility and diminished institutional trust due to a lack of clear regulations. The regulatory overhaul is being led by the UK Treasury and the Financial Conduct Authority (FCA), with the Bank of England targeting a decision on a digital pound in 2025. The new framework intends to integrate cryptoassets such as Ethereum (ETH) and Bitcoin (BTC) into mainstream securities laws, introducing six newly regulated activities.
While these changes are expected to enhance institutional credibility once implemented, the persistent uncertainty until then is impacting investor confidence and business strategic decisions. Firms operating in and out of the UK will need authorization under the new regime, which increases compliance costs and complexity for businesses.
The UK's slower regulatory pace risks diminishing its competitive edge in the global crypto market, especially with the European Union actively advancing its Markets in Crypto-Assets (MiCA) regulation. Industry insiders express frustration about the absence of a fixed timeline for the regulatory regime's go-live date, which seems postponed beyond 2026. Past attempts at regulatory reforms promised a "gold standard" post-Brexit but have so far mirrored inefficiencies seen previously.
The UK government faces both political criticism for procrastination and economic pressure as enhanced regulations are expected to raise compliance burdens. However, analysts suggest that clarity and stricter controls will benefit well-prepared firms and improve market conditions following final implementation.