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London’s fintech revolution has transformed its financial landscape. But despite success stories like Monzo, which has scaled to more than 13 million customers and more than $1 billion in annual revenue since its founding in 2017, broader metrics reveal a worrying trajectory. UK tech funding will fall by 35% to £16.2bn in 2024, 88 companies delisted from the London Stock Exchange last year, but just 18 new listings, and perhaps most troubling of all, one of London’s crown jewels, Revolut, announced its intention to move its main operations to Paris.
summary
- Once a hub of financial innovation, London is now at risk of losing its position as competitors from the US, EU and APAC move in with distinct digital asset frameworks.
- While debanking crypto companies, political inaction, and delayed frameworks undermine the UK’s competitiveness, other countries are moving quickly, including the US with its GENIUS and CLARITY laws, the EU with MiCA, and Hong Kong with its burgeoning licensing regime.
- Despite setbacks, the UK can still regain leadership through its adaptive regulatory tradition, high domestic cryptocurrency adoption rate (24%), and post-Brexit flexibility.
These figures highlight the uncomfortable reality that London is at risk of losing its position as Europe’s premier center of financial innovation. There is an established narrative that the UK is lagging behind in digital asset adoption and innovation, with the US, APAC and even the EU racing ahead in building comprehensive digital asset frameworks. However, while this narrative is based on legitimate concerns, there are also potential oversights. First-mover advantage is a well-documented fallacy, and there is still time for London to regain leadership in the digital asset economy.
the price of hesitation
The digital asset industry does not only represent speculative trading and volatile tokens. The global market capitalization of virtual currencies will exceed $4 trillion in September 2025, and some predict that it will exceed $20 trillion by 2030. These numbers are supported by increased institutional investor interest from global leaders such as BlackRock and JP Morgan, who increasingly view digital assets as an emerging asset class with transformative potential.
The recent stablecoin boom embodies this potential. With global market capitalization exceeding $300 billion, and Citigroup and others predicting it to grow to $4 trillion by 2030, these digital assets appear poised to reshape the digital economy and open new routes for cross-border capital flows. Importantly, stablecoin issuers have created significant demand for government bonds and bonds and currently hold large amounts of U.S. government debt.
While cryptocurrencies have long promoted their value to consumers, financial institutions are beginning to recognize cryptocurrencies not just as lucrative investment opportunities, but as the next generation of financial infrastructure that can reduce transaction costs, speed up settlement times, and improve overall profit margins. Just as fintech has brought huge economic benefits to the UK by creating thousands of jobs, attracting billions of dollars in investment and reasserting London’s financial credibility, a new generation of digital asset startups backed by institutional investors could deliver similar benefits.
But Britain seems either threatened by this disruption or unable to take its transformative potential seriously. The only major party with a clear digital asset policy position is the “emerging” party Reform UK, but the current government currently lacks a comprehensive or coherent stance aimed at delivering a full framework by the first quarter of 2026, and is unable to align with central banks. This delay has tangible consequences.
Regulatory paralysis and its effects
A 2025 study found that 50% of UK crypto and fintech companies had their bank accounts denied or closed, in stark contrast to the pro-neobank policies that enabled the rapid growth of Monzo and Revolt. Even more alarming, in 2024, 98% of crypto hedge funds faced unexplained bank denials. This systematic ‘debunking’ of digital asset businesses clearly highlights London’s long-standing embrace of financial innovation.
In contrast, the US GENIUS Act established a federal framework for stablecoin issuance earlier this year, and its proposed CLARITY Act would define future market structure and regulatory powers. The EU’s crypto market regulatory framework is estimated to potentially bring €1.8 trillion to the European market, despite implementation challenges, and APAC initiatives such as Hong Kong’s August 2025 licensing regime have helped drive market growth in the region to 85%.
But this hesitation is gradually giving way to more decisive action. The recently announced UK-US Transatlantic Task Force for Future Markets aims to submit recommendations on regulatory cooperation for digital assets by March 2026. This represents a real opportunity for the UK to align with the US framework on stablecoin standards, custody requirements and cross-border compliance, potentially creating a competitive advantage over the EU’s fragmented approach.
However, this initiative also highlights how far behind the UK is. The taskforce could reduce regulatory friction for companies operating in both markets, while positioning the UK as a follower rather than a leader, seeking alignment with US standards rather than setting the pace itself.
Bank of England mixed signals
Recent developments by the Bank of England further highlight the UK’s regulatory turmoil. In July 2025, Governor Andrew Bailey warned that stablecoins could reduce traditional banks’ reliance on deposit-based lending, and that this was a threat to the banking system. This position reflects the central bank’s longstanding conservatism towards digital assets, even bizarrely threatening to cap the amount of stablecoins that investors and companies can hold.
But this week saw a surprising turn, with Bailey softening his stance considerably. He acknowledged that “it would be a mistake to oppose stablecoins in principle,” and noted that stablecoins have the potential to foster payment innovation both domestically and internationally. Bailey even suggested that there is no need to “organize” the financial system around its current reliance on commercial bank lending, suggesting that “banks and stablecoins can coexist with non-banks taking on more of a credit-supplying role.”
This evolution of thinking should be welcomed. Recent research has shown that reduced dependence on bank loans actually correlates with increased technological development in European economies, and Mr Bailey’s change of heart may reflect a shift towards a more innovative approach. However, this reversal was not accompanied by any real policy decisions and came years after the US and Asia-Pacific had already accepted similar frameworks, during which time the UK lost momentum and market share.
Why the UK can still lead in crypto assets
But the fallacy of first-mover advantage offers real hope. There is no guarantee that you will be first to market. It’s not about who makes the first move, it’s about who does it best. Several factors make the UK more likely to make a comeback.
Gemini’s 2025 report highlights that crypto ownership in the UK has soared to 24%, growing faster than even the US. This grassroots adoption has created an organic demand for a better regulatory framework, suggesting a huge potential waiting to be unlocked. Regulatory leadership is likely to amplify this trend, as transparency and favorable policies attract institutional investment that fosters expansion.
Additionally, post-Brexit Britain will have the flexibility to leverage its independence from the EU market while maintaining geographic proximity. Implementation of MiCA has been difficult, with compliance hurdles and country-specific deadlines predicted to result in a 75% drop in companies gaining approval. In such a scenario, the UK could propose a streamlined, principles-based alternative that maintains market access while learning from the EU’s failures.
Similarly, the specific federal structure and restrictions on yield-bearing stablecoins in the GENIUS Act leave room for improvement in the UK. A framework that covers a wider range of asset classes and provides additional flexibility for tokenized securities could position London as a bridge between traditional finance and digital innovation and provide opportunities for regulatory arbitrage against the oversight of other frameworks.
The UK’s regulatory history supports this approach. The UK could adapt existing financial services regulations to encompass digital assets, rather than creating an entirely new framework. This is exactly the approach outlined in the near-final bill expected by the end of the year. Adaptation based on this principle, rather than prescriptive rulemaking, responds well to rapid technological evolution.
the window closes
While the UK postpones until 2026, competitors are gaining institutional investors, attracting top talent and building the infrastructure of tomorrow’s financial system. Monthly hesitation increases opportunity cost. Revolut’s move to Paris is not an isolated event. That suggests a broader population exodus will accelerate unless policies change. The UK can choose to remain on a cautious regulatory path while watching the digital asset revolution unfold in other countries, or it can take decisive action and regain its position as a leader in global financial innovation.
The UK built its financial reputation on bold innovations, from the world’s first ATM to pioneering fintech regulation. Leadership traditions don’t have to end in an analog economy. Digital assets represent the next wave of financial innovation, and the economic benefits such as jobs, investment, tax revenue, and global influence justify the regulatory risks. A comprehensive crypto policy can help the UK restore London’s attraction to global capital and position itself as a bridge between traditional finance and a digital future.
