Saving the Golden Goose: how the UK's Crypto Rules Narrowly Avoid America's Securitarian Trap

The UK currently stands at the forefront of competition for cryptocurrency and digital asset investment- and it is already the world’s third largest digital asset economy.

Britain’s success is due to our more permissive regulatory regime, compared with our international peers, most notably the US.  Although concerns were raised that the October 2023 reforms by the Financial Conduct Authority (FCA) have made the UK more restrictive, these measures concentrated on countering fraud. The UK has a good balance between consumer protection and support for business growth and development.

This advantageous approach contrasts with that of the USA, which is stifling innovation in the digital currency sector. Rather than treating crypto as a currency, the US regulates it in the same way it would an unstable asset such as a bond or a stock. This means it can be taxed if it fluctuates in value, and adds further layers of complex regulation, making the US less competitive in the process. 

As this paper highlights, if the Prime Minister wishes to achieve his stated goal to make the UK a ‘global crypto asset technology hub,’ the government must resist calls to over-regulate.