As crypto soars to record heights, favourable regulatory conditions would likely solidify the industry’s legitimacy – can the UK keep pace with its US and EU competition?
The full implementation of the EU’s MiCA (Markets in Crypto-Asset Regulation) is imminent, as is Trump 2.0 in the US. UK regulators are facing a fast-moving environment, and they’ve been historically slow to react.
A Regulatory Redux
The FCA recently published its roadmap to fully regulate crypto by 2026, with the view to ‘develop a sector that embraces innovation and is underpinned by market integrity and consumer trust.’
It’s worth noting that critics have suggested the regulator acts as a deterrent, essentially reducing the UK’s attractiveness to crypto firms. The claims add to mounting pressures from commentators (including the government) that the FCA is stifling economic growth.
It’s clear from our conversations with investors, wealth managers, and compliance experts that industry sentiment is split: some are eager to embrace crypto disruption, while others are wary of the extreme price fluctuations and capacity for fraud.
Whatever the case, the impossible-to-ignore crypto boom isn’t slowing down (hence the FCA’s expedition of its roadmap). Data from the FCA reveals that 12% of all UK adults own some form of crypto asset. That’s around 7 million people with an average holding of £1842.
Timeline
In a ‘single phase’ approach, the government intends to proceed with regulation for both stablecoin and crypto-assets simultaneously. The key dates from the roadmap are:
Q4 2024: Discussion papers on Admission and Disclosures and Market Abuse
Q1/Q2 2025: Discussion papers on Trading Platforms, Intermediation, Lending, Staking, and Prudential considerations, and consulting papers on stablecoins, custody, and prudential.
Q3 2025: Consultation papers on Conduct and Firm Standards for all Regulated Activities Order (RAO) activities, and per the previous discussion papers, Admissions and Disclosures and Market Abuse.
Q4 2025/Q1 2026: Consultation papers on trading platforms, intermediation, lending and staking as per the discussion paper, and the remaining material for the prudential sourcebook.
2026: Final rules are expected.
The Road Ahead for Financial Services
The convergence of conventional finance and crypto is a reality that the UK government is aware of, as mentioned by Tulip Siddiq in her address at the Tokenisation Summit. Regulation will need to reflect this unique relationship, and firms must follow the development carefully to find the balance between innovation and compliance. We expect 2025 to be a year of landmark change for financial services in the UK. Change that we are eager to help firms navigate.
How are you planning on approaching crypto in the year ahead? We’re eager to learn more from industry leaders across financial services. Collaborating with our partners over at DeepRec.ai, the team at Broadgate is equipped to provide workforce solutions at the intersection of deep tech and finance.
Broadgate is a leading risk and compliance recruitment agency, connecting incredible candidates with forward-facing businesses across the UK, Ireland, Switzerland, Germany, Luxembourg, and the US.
Contact me to find out more about our global services: Ben@trinnovo.com
