Treating everything in crypto as a financial instrument subject to full regulatory oversight seriously undermines the UK’s competitiveness, the firm said.
At Zebu Live in London this week, the regulatory environment for crypto in the UK was a hot topic, with many in the industry frustrated over the current lack of a clear framework and pace of progress from regulators.
Consensys Senior Counsel and Director of Global Regulatory Matters Bill Hughes was particularly scathing, telling The Block it continues to be concerned that the Financial Conduct Authority will be “heavy-handed” in its oversight of the space.
“We think that has cost the UK to the extent that it has lost its position to the U.S. as a crypto hub,” he said. “Deciding that everything in crypto is a financial instrument subject to all the applicable rules really hampers UK competitiveness.”
Consensys is a blockchain software firm that counts Ethereum Layer 2 Linea, popular web3 wallet MetaMask, and infrastructure platform Infura among its product suite. Yet despite its UK presence, the financial regulator has not reached out to the company for input on crypto policy, nor have any political figures, Hughes confirmed.
Hughes urged policymakers to see that the blockchain space has a lot to offer society, and that “putting it behind the iron gates of traditional financial regulations will keep the UK from leading the pack.”
During a panel discussion at the conference itself on Tuesday, FCA Head of Innovation Colin Payne came under fire for the regulator’s approach, with industry representatives from Kraken, Coinbase, and the UKUS Crypto Alliance arguing that the UK’s cautious stance risks stifling innovation and driving firms abroad.
Payne defended the FCA’s position, stressing its duty to protect consumers and build long-term trust through evidence-based policy, adding that the regulator “won’t apologize for being cautious” after past market collapses underscored the need for prudence.
Stark difference between UK and US
The UK has so far adopted a phased approach to crypto regulation, aiming to position itself as a global hub for digital assets while prioritizing consumer protection and financial stability.
For the past five years, UK-based crypto firms have been required to register with the FCA to comply with anti-money laundering, counter-terrorism, and know-your-customer rules. However, the regulator’s current remit is limited to financial promotions and preventing financial crime — filing a lawsuit in the High Court against entities tied to crypto exchange HTX just yesterday, alleging the unauthorized promotion of cryptocurrencies to consumers.
In contrast, the U.S. has since taken a swifter and more crypto-friendly approach under President Donald Trump, increasing pressure on Britain to respond with a more comprehensive framework.
“The starkest difference is between the UK and the U.S.,” Hughes said. “Whereas in the U.S. there is a real desire to give blockchain technology the room to breathe and advance, the tone in the UK is much different, focusing instead on risks and uncertainties. We think pro-innovation policies will prove to be the wisest path when all is said and done.”
Asked what kind of regulatory framework would best support blockchain innovation in the UK, Hughes again pointed toward the U.S. following its recent federal stablecoin legislation and ongoing market-structure efforts.
“Take notes on what is happening in the U.S. right now and follow along, and maybe the trend of technologists shifting focus away from the UK will reverse itself,” he said.
Policymakers and regulators warming up to crypto in the UK
Last year, the UK government unveiled plans for a full crypto regulatory framework, with comprehensive regulations covering stablecoins, trading platforms, lending, staking, and custody currently under consultation, and full implementation expected sometime in 2026.
“It feels like 2026 is definitely going to be the year when the framework is put out there. But whether it’s January or December, or sometime in between, no one really knows,” Gemini Head of UK Daniel Slutzkin told The Block earlier this week, noting that many people are still waiting for further regulatory clarity to provide a “stamp of approval” before they start to dip their toes into crypto. “It’s good for investors to see. It’s good for companies to be able to say we are regulated, and to be able to hold their heads up a bit higher when they are marketing products.”
Therefore, the UK does now have a clearer path toward comprehensive crypto regulation — the kind the industry has been requesting for years, Kraken UK Managing Director Bivu Das said on Tuesday, covering the “nuts and bolts” of market structure. “But we need to move faster, and we need to be brave on the things that we know will make a difference,” he said, noting the country can do better. “Maybe there’s light at the end of the tunnel to do this relatively quickly.”
One restriction the FCA did lift recently was a ban on crypto exchange-traded notes for UK retail users. BlackRock, 21Shares, Bitwise, and WisdomTree were among the first to list Bitcoin or Ethereum investment products on the London Stock Exchange on Monday as a result. However, the broader crypto asset derivatives ban for retail remains in place.
UK investment firm IG Group said the country’s crypto market could see 20% growth following the move that puts it more in line with the U.S. The investment and trading giant’s survey found that 30% of UK adults would consider investing in crypto via ETNs — a sharp rise from the current crypto ownership levels of 12% estimated by the FCA’s own research.
That growing percentage of the pro-crypto electorate is seeing a marked rise in support from political figures too, most famously from Reform UK leader Nigel Farage, who reiterated his pledge to be a champion for the industry and “bring in digital assets and crypto from the cold” at Zebu Live on Wednesday.
Reform is flying high in the polls, though the next general election is not due until 2029, and plans to introduce a Crypto Assets and Digital Finance Bill if the right-wing populist political party is elected. That could mean the creation of a “bitcoin digital reserve” in the Bank of England, a reduction in capital gains tax from 24% to 10%, and making it illegal for any bank to close customer accounts simply because they send or receive funds from crypto exchanges or trade legal cryptocurrencies.
Speaking in the House of Commons on Thursday, Labour co-chair of the UK’s Crypto and Digital Assets All Party Parliamentary Group, Gurinder Singh Josan CBE MP, also struck a positive tone.
“Cryptocurrency and digital assets are held by an increasing number of UK citizens — over 8 million people in recent figures. The UK has the potential to be the world leader in this field, supporting our growth mission,” he said, calling for rapid action by the government to regulate the sector.
