Britain’s ambitions to become a dominant global hub for digital assets are running into a wall of political inertia and regulatory gridlock, Jonny Fry, a blockchain and global banking researcher, founder of Digital Bites and CEO of TeamBlockchain Ltd., told CoinDesk.
Despite outward assurances of progress from the Financial Conduct Authority (FCA), industry insiders suggest that nagging bureaucratic barriers and regulatory friction behind closed doors are seriously delaying the implementation of a unified crypto framework. The slow progress is raising concerns that Britain is giving critical economic ground to regimes in Washington and Brussels.
Fry said Britain should worry about other more critical issues. “The real risk is not that companies will physically leave the UK,” he said. “The risk is that the next generation of digital asset infrastructure will be built elsewhere.”
The concern on the floor of the Digital Money Summit 2026 in London reflects a deep-seated institutional divide. While the private sector requires swift execution to unlock massive market efficiencies, a web of fragmented powers between HM Treasury, the Bank of England and the FCA has seriously breached the payment and investment perimeters.
“We have a situation at the moment where the Treasury is looking to set the law and then we get the FCA to have publicly issued stablecoins and a Bank of England-issued digital pound,” Fry noted.
He warned that this fragmented approach creates deep operational uncertainty, complicating how the jurisdiction handles the “simplicity of money” across tokenized deposits and digital assets.
This administrative friction has pushed several high-profile digital asset firms to abandon the UK altogether, opting to relocate to jurisdictions with immediate regulatory clarity. Fry cited the crypto derivatives exchange Deribit as a good example.
“Had we had the regulatory clarity that staking your crypto was not a collective investment scheme, Deribit might 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 the 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, slow approach to crypto is deeply frustrating for the private sector, an article in the Financial Times said last week. It added that while companies push for rapid integration, the central bank’s tight restrictions on stablecoins have created a massive regulatory bottleneck.
Caught between Downing Street’s political priorities and the Bank of England’s vigilance over monetary stability, the FCA has preferred to emphasize its controlled testing environments rather than publicly air its operational frustrations.
Matthew Long, director of payments and digital assets at the FCA, took a more positive approach to the pace at which rules are being adopted, presenting the timeline as a calculated, modular rollout designed to build a bulletproof regime.
“So I think we’ve delivered a comprehensive scheme that’s open for business right now. We encourage companies to apply,” he told CoinDesk. “We have our pre-application support service available, so what I’m saying to companies is that it’s open for business.”
But if UK regulators do not move with true market flexibility, liquidity will inevitably default where capital is most liquid, Fry warned. Without a competitive digital pound alternative, private operators will simply settle transactions using dominant US dollar-backed stablecoins.
“We will end up seeing dollarization,” Fry warned.
The UK rules are due to come into force in October 2027.
