The UK needs to accelerate its digital asset regulation – this was the key message from Capital Pioneer Summit’s Regulatory Keynote speakers. All agreed that close collaboration with industry, balancing innovation with prudence, can only work if regulation evolves quickly enough to support it effectively.
TheCityUK’s Rosalie Brown opened proceedings, hosted by Rhotic Media CEO Joe McGrath, by discussing the findings of its recent report on the digitalisation of UK capital markets, which explored the potential of Distributed Ledger Technology (DLT) and tokenised bonds to modernise the sector.
Brown noted that technological change is reshaping global finance, and jurisdictions that lead this transformation will attract investment and strengthen their positions as financial centres.
While the UK has made progress, through initiatives like the Digital Securities Sandbox, Digital Gilt Instrument (DIGIT), and steps toward a legal definition of digital assets, more is needed.
Brown said that the UK is moving from “rhetorical support to concrete policy action” but must act quickly to maintain competitiveness in the light of rapid global developments.
“The digitalisation of UK capital markets is not optional,” she said. “It’s central to preserving the UK’s place in global finance. Time is of the essence.”
Ian Taylor, board member and advisor to CryptoUK, acknowledged the progress made since the UK government announced its ambition in 2022 to become a global digital asset innovation centre, but said the regulatory process was still far too slow.
“We’ve been consulting on stablecoin regulation since 2020, and we’re still consulting now,” Taylor said. “Meanwhile, Europe and Asia have already implemented frameworks.” A problem for companies seeking to be compliant, he added, was the need to set up offshore to access the UK market.
According to Taylor, regulators face a difficult balance between consumer protection and supporting innovation, especially where digital assets don’t fit neatly within existing regulatory models. The result, he said, is “death by consultation”, with overlapping reviews from the FCA, HM Treasury and Bank of England creating confusion and delay.
“Firms are starting to look elsewhere,” he warned. “Even UK companies are setting up overseas.”
Dialogue between regulators and industry is vital, suggested Anya Markitanova, ambassador to CryptoUK. UK firms often see regulators as adversaries, she said, whereas other jurisdictions encourage active engagement through regular consultations and workshops.
“In the UAE, crypto exchanges and custodians can sit down with the regulator, explain their business models, and help design workable rules,” she said, “but in the UK, the relationship is still too distant.”
Markitanova concluded by urging regulators to regulate outcomes and not technology, stressing that blockchain is inherently transparent and can enhance, rather than reduce, oversight.
