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Workers cross a junction near the Bank of England (BOE) in the City of London, UK, on Tuesday, April 8, 2025.
LONDON — The U.K. is facing a significant risk of losing emerging fintech and cryptocurrency entrepreneurs to competing global hubs unless it addresses urgent regulatory and funding challenges, industry experts warn.
Multiple cryptocurrency executives expressed to CNBC this week that the current environment in the U.K. is not conducive to fintech and crypto innovation. They argue that the local regulatory body takes an excessively stringent approach to the registration of new firms, while pension funds managing trillions of pounds exhibit a marked aversion to risks.
Jaidev Janardana, CEO of the digital bank Zopa, noted that a decade prior, the U.K. was seen as a leader in promoting competitiveness and innovation. However, he feels the focus has shifted considerably toward prioritizing safety and soundness, often at the cost of growth opportunities.
“In terms of the pace of innovation, I see the U.S. as ahead, despite its own challenges. Singapore and Hong Kong are also moving more rapidly in this area,” Janardana commented, adding that while the U.K. still outpaces the EU, complacency could prove detrimental.
Tim Levene, CEO of venture capital firm Augmentum Fintech, highlighted that entrepreneurs are currently facing significant difficulties in securing funding within the U.K., prompting many to consider starting their ventures in regions like Asia or the Middle East.
“We’re scrambling to find capital in the U.K., while it would be more productive to venture to the Gulf, the U.S., Australia, or other parts of Asia, and that feels unsettling,” Levene stated.
Lisa Jacobs, CEO of Funding Circle, emphasized that the repercussions of Brexit continue to have a notable impact on the U.K. fintech industry, particularly in attracting international talent.
“It’s sensible to be concerned about competing locations,” Jacobs mentioned, acknowledging that while the U.K. has strong foundational elements, including a robust ecosystem and talented individuals launching new businesses, ongoing efforts are essential to maintain this status.
Crypto Rules Lacking Clarity
The U.K. boasts a robust financial technology sector, with companies like Monzo and Revolut emerging as challengers to traditional banking paradigms.
Industry insiders attribute their rapid growth to regulatory frameworks that facilitated easier acquisition of licenses for banking and electronic money services. However, the same opportunities have not yet been extended to cryptocurrency firms.
“Competitors in other jurisdictions are starting to capitalize on their advantages,” said Cassie Craddock, U.K. and Europe managing director at blockchain firm Ripple.
The U.S. has adopted a more supportive stance on cryptocurrency under the previous administration, with the Securities and Exchange Commission dropping several prominent legal actions against significant crypto entities. In contrast, the EU has established clearer regulations with its Markets in Crypto-Assets (MiCA) framework.
“The U.S. is driving global momentum for the industry,” Craddock noted, pointing out that MiCA came into effect in the EU late last year, while regions like Singapore, Hong Kong, and the UAE are advancing pro-industry reforms.
Recently, the U.K. presented draft proposals for regulating crypto firms, but industry insiders stress that the effectiveness of these measures will depend on the details, especially regarding complex issues like reserve requirements for stablecoins.
Stablecoin Regulation Ambiguities
A focal point for both fintech and crypto leaders is the need for greater clarity surrounding stablecoins, which are cryptocurrencies pegged to the value of fiat currencies.
Mark Fairless, CEO of payments infrastructure firm ClearBank, shared that his company aims to develop its own stablecoin but faces hurdles due to ambiguous regulatory guidelines.
“Stablecoins are integral to our long-term strategy,” Fairless explained, indicating that launching one is contingent on achieving regulatory certainty in the U.K. ClearBank is currently seeking approval from the Bank of England.
Additionally, crypto firms contend with challenges related to being “debanked” by traditional banking institutions, as highlighted by Keith Grose, head of the U.K. division at Coinbase.
“The issue of debanking is significant — many companies and individuals involved in crypto struggle to secure bank accounts,” Grose remarked. “Without equitable banking access, we cannot establish the future of the financial system in the U.K.”
A survey conducted by Startup Coalition, Global Digital Finance, and the U.K. Cryptoasset Business Council indicated that over half of the 80 participating crypto firms had either been denied bank accounts or had their existing accounts closed by major banks.
“I believe the U.K. has the potential to get it right, although failing to do so risks pushing innovation to alternative markets,” Grose warned, underscoring the rapid development of the crypto landscape, where stablecoins experienced a 300% growth last year, surpassing transaction volumes of Visa and Mastercard.
“With appropriate regulation, stablecoins could become a cornerstone of our payment ecosystem in the U.K. moving forward,” he added.
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