Three ways the UK can become a digital assets hub

Back in 2022, Britain’s previous Prime Minister Rishi Sunak stated his intention to make the UK a global hub for cryptocurrency and digital assets. While much of his roadmap did not come to pass before last year’s General Election, there seemed to be an agreed direction of travel. Now that Labour has been in power for almost a year, what lies ahead for the UK as a centre for innovation?

What have we seen from the new Government regime on digital assets?

Looking at the Labour manifesto, several areas stand out including the promise to boost economic growth and ensure a “pro-business environment, with a competition and regulatory framework, that supports innovation, investment and high-quality jobs”. Keir Starmer also pledged to create the conditions to support innovation and growth in the financial services sector, through “supporting new technology, including open banking and open finance and ensuring a pro-innovation regulatory framework”.

Despite these pledges, trade bodies led by the UK Cryptoasset Business Council recently urged the Prime Minister’s Special Adviser on Business and Investment, Varun Chandra, to prioritise digital assets and blockchain, highlighting their economic value. They call for the government to apply the same strategic focus to blockchain as AI, emphasising the need for improved cross-sector collaboration drive industry growth.

Digital assets are no longer a niche player in the UK economy

Digital assets now play a significant part in the UK economy. They also interrelate with other frontier technologies such as AI and should not be viewed in a vacuum. According to FCA data, 12% of UK adults own cryptoassets, which equates to roughly 7 million people. The figures are even more telling when it comes to young adults where, of those investing, 46% held cryptocurrencies, while 41% owned stocks directly. These figures show that the next generation is increasingly financially literate and sees holding digital assets as part of building a diverse portfolio.

The UK presents a compelling case as a hub for digital assets. According to 2024 research by techUK, the UK boasts Europe’s leading tech ecosystem, having produced 171 unicorns and achieved a market valuation of $1.1 trillion. Leading universities have cultivated significant research expertise in blockchain, with many now collaborating through the UK Centre for Blockchain Technologies, which is building a map to demonstrate blockchain’s contribution to the UK economy. On top of this, the UK’s strong fintech sector boasts plenty of highly skilled technical talent and the opportunity for funding through leading tech-focused Venture Capital firms (VCs). The UK also has an opportunity, given America’s current drive to promote digital assets, to benefit from its strong ties to the US tech ecosystem.

The UK now faces a prime opportunity to embrace digital assets and blockchain for innovation and modernisation within our financial services sector. This article examines three key areas that could propel the UK toward becoming a global crypto hub.

1. Embracing tokenisation: The UK is grasping the nettle in key areas like real-world asset tokenisation, for example, through launching DIGIT, a pilot issuance of UK government debt using distributed ledger technology (DLT). This initiative is exploring how DLT can be applied across the lifecycle of the UK sovereign debt issuance process and is intended to catalyse the development of UK-based DLT infrastructure, as well as its adoption in UK financial markets. The pilot is part of the UK’s Digital Securities Sandbox (DSS). However, stablecoins will not be available for the payment leg of any DIGIT transaction as they are not in the scope of the DSS.
2. Providing regulatory clarity: Although new draft legislation has been published with guidance on stablecoin issuance and custody regulation to follow soon, the lack of regulatory clarity and pace of consultation on stablecoins is a key area where the UK has been under pressure to do more, particularly in view of a new US administration which has been bullish on digital assets in general, and on stablecoins in particular. Within his first 100 days, President Trump signed the US’s first-ever digital asset-related bill and the SEC’s Division of Corporation Finance recently announced that stablecoins designed to maintain a stable value relative to the U.S. dollar and backed by low-risk assets do not constitute securities. Meanwhile, Congress is being presented with two competing bills (GENIUS and STABLE) that could define the future of stablecoin regulation. The outcome of these bills could transform the global digital dollar landscape. The FCA’s recent draft bill marks the beginning of a potential change in momentum.  On 29th April, the FCA published Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 The draft bill offers a number of clarifications but perhaps the most surprising is the definition of “qualifying cryptoassets” which are to be brought into the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) as a specified investment, meaning that a number of activities will become regulated when carried out in relation to them.  The deadline for comment on the Bill is 24th May. Does this mark the beginning of Britain catching up with other jurisdictions and clarifying its position?
3. Launching a Central Bank Digital Currency (CBDC): The Bank of England long ago announced that it was exploring a digital Pound for use by citizens. As part of the ongoing design phase for the digital Pound, it has also just launched the Digital Pound Lab, a new initiative inviting innovators, fintechs, and technology providers to explore and test potential use cases for a UK CBDC. However, there has been far less public discussion of the need for a wholesale CBDC (wCBDC). A wCBDC would provide a trusted on-chain settlement asset which would benefit the institutional digital asset market, particularly if the UK wants to seize the advantages as real-world asset tokenisation takes off. Currently, given the speed of implementation most industry hopes are resting on privately-issued stablecoins rather than on a central bank-backed solution.

Addressing any of the above proposals would provide positive market sentiment that Britain wants to continue to compete with other leading digital asset jurisdictions such as the UAE, Singapore or, indeed, the USA. With Chancellor Rachel Reeves looking for every avenue to create new jobs and growth, isn’t now the moment to seize the promise that digital assets have to offer?