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A group of British trade associations have appealed to the United Kingdom Government for greater “strategic focus” on digital assets and appointing a “special envoy” dedicated to the sector.
In a March 31 letter, the cohort of six U.K. digital economy trade bodies wrote to Prime Minister Kier Starmer’s Business and Investment Special Advisor, Varun Chandra, to “highlight the value proposition of the digital asset and wider blockchain ecosystems” and urge the government to “remain proactive and competitive to attract businesses, talent, and capital.”
The trade bodies, the UK Cryptoasset Business Council, techUK, Global Digital Finance, The Payments Association, Digital Currencies Governance Group and Crypto Council for Innovation, specifically pointed to the shift in United States digital asset policy since the election of President Donald Trump, as well his appointment of a “crypto czar.”
“Recent geopolitical events, namely the election of Donald Trump, have precipitated a global digital race to capture the economic and societal benefits of this new wave of technology,” the trade bodies wrote.
“The UK’s positive commitment to a U.S.-UK economic trade deal focused on technological cooperation presents a significant opportunity to mirror the United States’ ambition in fostering leadership in blockchain, digital assets, and other emerging financial technologies.”
The letter proposed four key recommendations to help shape a dedicated government action plan for digital asset and blockchain technology, including a “concierge service to attract high-potential firms.”
Four core suggestions
First amongst the four core requests outlined in the letter was that the U.K. should follow the lead of the U.S. and appoint a blockchain special envoy to ensure that regulation and innovation evolve hand-in-hand “by leading international collaboration, attracting investment, and creating a structured feedback loop between government and industry.”
Next, the letter called for a dedicated government action plan, akin to the U.K.’s approach to artificial intelligence (AI), to identify key opportunities and challenges in the blockchain space, focusing on attracting investment.
Third, the trade bodies said the government must acknowledge the synergy among blockchain, quantum computing and AI, arguing that only by leveraging these technologies “in unison” will the U.K. “bolster the blockchain thesis by fortifying security, scalability, and functionality, thereby catalyzing broad-based adoption and support.”
Finally, the letter urged improved education. Specifically, addressing “gaps in the Government’s understanding of the technology and coordination across departments,” by creating a “high-level industry-government-regulator engagement forum.”
If the government acts on these four suggestions, argued the trade bodies, the U.K. economy will benefit substantially.
An untapped well
In order to ram home the potential financial and economic benefits of its recommendations, the trade associations cited recent research from blockchain analysis firm Chainalysis that found, between July 2023 and June 2024, that the U.K. received £175 billion ($226 billion) in on-chain transactions.
It also pointed to Financial Conduct Authority (FCA)—the U.K.’s top finance sector regulator—research from 2024 that found 12% of U.K. adults, equating to seven million individuals, own digital assets, an increase of 10% from the previous year.
Together, these findings support a 2020 PwC report, also cited by the trade bodies, that projected blockchain technology could boost the U.K. economy by £57 billion ($74 billion) over the next decade, with the public sector likely to receive the biggest boost.
“Only the US and China are projected to see greater gains,” noted the trade associations’ letter.
The PwC report, titled ‘Time for Trust: The Trillion-Dollar Reason to Rethink Blockchain‘, also estimated that blockchain could boost global GDP by £1.39 trillion ($1.79 trillion) by 2030 through enhanced tracking, tracing, and trust.
UK government’s current approach to digital assets
Part of the trade groups’ plea to the government was for it to speed up its existing digital asset plans.
Thus far, the U.K. has taken a somewhat ‘wait and see’ approach to the space, not introducing radical regulatory reform, such as the European Union’s (EU) Markets in Crypto Assets (MiCA) Regulation, but also not the completely hands-off approach that characterized U.S. digital asset policy—up until Trump took office.
The most significant development in the U.K. digital asset policy came in September last year, when the government took up the recommendation of the Law Commission—a statutory independent body that keeps the law of England and Wales under review and recommends reform—and introduced a bill to create a new category of personal property for digital assets and non-fungible tokens (NFTs).
This stemmed from a July 2024 Law Commission report highlighting the inadequacy of the contemporary U.K. categorization of personal property to account for digital assets. The report proposed introducing a “third category” to ensure that property rights related to digital assets were clear and enforceable.
This conclusion, eventually taken up by the government, was held up by the six trade bodies—in their March 31 letter—as an example of the U.K.’s willingness to adapt to new technologies.
“If our legal industry can bend to future proof our economy, now is the time to utilize both the technology and our common law system for the good of the country at large,” the associations said.
Other than creating a new category of property to account for the unique nature of digital assets, the U.K. has favored more of a measured incorporation of the sector into existing laws and rules.
One prominent example was the passage into U.K. law of the Financial Services and Markets Act (FSMA) 2023, which gave regulators powers to incorporate digital assets into the existing financial services regulatory framework.
The Act was passed on June 29, 2023, and came into force two months later. The bill extended the banking rules of the FSMA, such as maintaining adequate capital to withstand financial shocks and implementing robust risk management practices to provide transparent information to customers about stablecoins and digital assets. This meant that, for the first time in the U.K., digital assets were officially recognized as a regulated financial activity.
It also caused some consternation amongst market participants, mainly due to the requirement for financial promotions to be communicated by an “authorized person” and the resulting difficulty some digital asset players had in becoming an authorized person—or even finding one willing to communicate the promotion.
However, in November 2024, the new Labour government hinted at a broader approach to digital asset regulation.
In her first comments after the July 2024 U.K. general election, Economic Secretary to the Treasury Tulip Siddiq MP delivered a speech at the Tokenisation Summit highlighting the government’s commitment to fostering innovation in the financial services sector.
Siddiq suggested that the government would stand by previous proposals to create new regulated activities for digital assets, including the operation of a digital asset trading platform, as well as an extension of the market abuse rules.
The FCA, who the FSMA made the primary regulator to oversee the sector, subsequently published their “Crypto Roadmap,” which, if followed, noted that the new digital assets regime would go into effect sometime in 2026.
According to the roadmap, the government also intends to introduce, amongst other measures, rules for trading platforms, such as location, access, matching and transparency requirements; stablecoin requirements related to the backing of assets and redemption; and custody requirements around record keeping and segregation of assets.
This increased regulatory clarity, if instituted to encourage innovation and incorporate the recommendations of market participants, cannot come soon enough for the six trade associations, who rounded off their collective case to the U.K. government by urging continued progress in this regulatory effort to ensure the U.K. remains competitive.
“While some jurisdictions have struggled to provide regulatory clarity, leading to uncertainty and an exodus of innovators, the UK is making tangible progress in crafting a clear and proportionate regulatory framework,” said the letter. “It is vital that we ensure this continues, or we risk jurisdictions like the US, Singapore and Hong Kong stealing a march.”
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