The United Kingdom’s ambition to become a global crypto hub is slipping away, and according to blockchain software giant Consensys, the blame lies squarely with the Financial Conduct Authority’s (FCA) heavy-handed regulatory approach. During the Zebu Live conference in London, crypto industry leaders expressed growing frustration at what they perceive as an overly restrictive and slow-moving regulatory environment that is forcing innovators and investors to look elsewhere—especially the United States.
Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, said that the FCA’s approach of treating every crypto asset as a financial instrument under full regulatory scrutiny has “cost the UK its position to the U.S. as a crypto hub.” He added that this attitude “seriously hampers the UK’s competitiveness” and risks alienating the very innovators who could help the country lead in blockchain technology.
Despite Consensys’s presence in the UK and its major products like MetaMask, Infura, and Ethereum Layer 2 Linea, Hughes revealed that neither the FCA nor UK policymakers have reached out for consultation or input on digital asset frameworks. Instead, he urged regulators to recognize the societal and economic benefits of blockchain, warning that confining the industry behind “the iron gates of traditional finance” would only stunt progress.
The debate over regulation took center stage at the event, where FCA Head of Innovation Colin Payne faced criticism from executives representing Kraken, Coinbase, and the UK-US Crypto Alliance. They accused the FCA of stifling innovation through excessive caution, while Payne defended the regulator’s focus on consumer protection, emphasizing that “building trust requires evidence-based policy” and that the FCA “won’t apologize for being cautious” following the collapse of major crypto firms in recent years.
The contrast between the UK and US approaches could not be clearer. The US, under President Donald Trump, has been quick to advance crypto-friendly policies, including new federal stablecoin legislation. Hughes praised this proactive stance, suggesting the UK should “take notes from the US” if it wants to reverse the exodus of technologists and developers moving across the Atlantic.
While the UK government has announced plans for a comprehensive crypto regulatory framework—expected by 2026—industry leaders say progress remains sluggish. Gemini’s UK head, Daniel Slutzkin, described the framework as “a long time coming,” while Kraken UK Managing Director Bivu Das called on regulators to “move faster and be brave” to deliver the clarity the market needs.
Signs of progress are emerging. The FCA recently lifted its ban on crypto exchange-traded notes (ETNs), allowing firms like BlackRock, Bitwise, and 21Shares to list Bitcoin and Ethereum products on the London Stock Exchange. This decision could boost the market by as much as 20%, according to a survey by IG Group, which found that 30% of UK adults would now consider investing in crypto via ETNs—more than double the current ownership rate.
Political interest in digital assets is also rising. Reform UK leader Nigel Farage has pledged to make the UK “a champion for digital assets,” proposing tax cuts and protections for crypto investors. Meanwhile, Labour MP Gurinder Singh Josan, co-chair of the UK’s Crypto and Digital Assets All-Party Parliamentary Group, urged the government to act swiftly, noting that over 8 million Britons now hold crypto.
Conclusion:
The message from Consensys and the broader crypto community is clear: the UK’s regulatory rigidity risks pushing innovation overseas, while the US and other regions continue to embrace blockchain’s potential. Unless the UK accelerates its efforts to balance consumer protection with innovation, it could permanently lose its standing as a global digital finance leader.
