The crypto sector is for turning

The rapidly growing crypto industry continues to make headlines, with the sector’s market capitalisation breaching the $4 trillion mark recently.

It’s fair to say that developments are being led by the US. The Trump administration recognises that digital assets offer a significant economic growth opportunity, and the passing of the GENIUS Act has been followed up by coordinated efforts from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to show they are moving in lockstep to open the policy gates to crypto businesses. 

This sense of regulatory certainty has injected renewed confidence into the US market, which is now benefitting from a wave of institutional interest and IPOs, with the likes of Gemini and Bullish enjoying successful listings in recent weeks. A robust IPO market, of course, contributes significantly to overall economic expansion.

Moving beyond the stereotypes

Things have been moving a little more slowly on this side of the pond. 

Unfortunately, growth has been stifled by regulatory inertia, as well as intellectual snobbery and perhaps a misplaced moral superiority, with crypto likened to gambling and one publication referring to it as ‘financial cocaine for the middle-classes’. A resilient financial system should always strive to embrace new ideas and structures that add value for those it serves – not panic and revert to name-calling.

This contrasts sharply with the UK’s emergence as a fintech hub, which was built on a deep understanding of specialist capabilities, the fostering of regional clusters, and regulatory openness. It also highlights the continued misunderstanding around the crypto sector, and how it can fuel much-needed economic growth.

And far from being a middle-class luxury, studies show a widespread appetite to invest in crypto, especially from younger consumers who feel locked out of the incumbent financial system. Zumo’s research reveals UK ownership rates approaching 40% across younger cohorts, while the Financial Conduct Authority’s (FCA’s) own figures also show a growing footprint. 

Given the current state of play, it should come as no surprise that companies like Bitpanda have been vocal about ruling out a UK listing, while industry leaders were busy calling for legislation and clarity in the run up to the Labour Party Conference.

The good news is that things look like they’re beginning to change. In the midst of the political party season, and thinking of a famous quote, I believe that the crypto sector is for turning.

Building on the positive signs

There are now real signs that the UK is finally starting to wake up to the opportunities on offer.

The FCA has loosened its iron grip and reopened retail access to crypto exchange traded notes (cETNs) with the regulator also announcing its intention to cut crypto registration approval times by two-thirds as it builds towards a comprehensive regulatory regime for the industry. 

The UK Parliament has also relaunched the All-Party Parliamentary Group (APPG) for Crypto and Digital Assets and we’ve seen the arrival of the first FCA-registered stablecoin in the shape of Tokenised GBP. 

Perhaps most compellingly, US Treasury Secretary Scott Bessent and UK Chancellor Rachel Reeves have come up with plans to put together the Transatlantic Taskforce for Markets of the Future, extending the ‘Special Relationship’ into the digital assets arena.  

The taskforce will hopefully enable the emergence of short-term benefits that provide a timely boost for the sector while the longer-term regulatory framework is still being defined. The Treasury has said the group will explore ways in which to reduce the burden of cross-border financing, which will be a welcome start given the borderless nature of the crypto market. 

While there is growing cause for optimism, there are still some issues to iron out. For example, the Bank of England’s proposals to impose strict limits on stablecoin ownership have prompted a backlash from the industry and seem at odds with the Treasury signalling support for greater digital innovation in the financial services arena. 

Policymakers need to quickly shake off any remaining scepticism and connect their fragmented thinking to speed up developments and keep the UK competitive, showing the same spirited approach they did for fintech. 

We have the talent, the investor appetite, and a prized reputation when it comes to financial services and legal and regulatory matters. It’s time to capitalise on these advantages to unlock new avenues of economic growth and ensure we’re not left behind.