- The U.K.’s newly drafted crypto regulations will exclude “true” DeFi to spur innovation.
- Gemini’s 20205 report found that almost 1 in 4 U.K. residents owned crypto.
- The U.K. has ruled out establishing a Strategic Bitcoin Reserve.
The U.K. has long been a heavyweight in global finance, but when it comes to crypto, it’s struggled to claim center stage.
To understand what’s holding it back—and what might finally push it forward—CCN caught up with Gemini U.K.’s new head, Daniel Slutzkin.
He shared his thoughts on why the tide may be turning and how the U.K. could soon shake off its regulatory hesitations to lead in the next era of digital finance.
A Historical Powerhouse
The U.K. has long stood as one of the world’s financial powerhouses, a hub of global financial activity with a centuries-old banking system that has attracted attention from the world’s wealthiest economic institutions.
Slutzkin explains that it’s only natural to expect a rapidly growing asset class, like crypto, to play a role in that landscape.
However, he adds that there has always been “somewhat of an anti-crypto sentiment” among the nation’s regulators.
The problem is that the U.K. is taking a ‘one foot in, one foot out’ approach that fosters innovation, albeit without a clear rule book for firms to follow.
He explains that this sentiment comes from a lack of regulatory clarity, which includes tighter restrictions on products and rules on marketing crypto.
“Similarly, conditions beyond policy, such as taxation and market access, have not been favourable, which has made it difficult for the U.K. crypto sector to stand out in the global arena,” Slutzkin notes.
He notes that things could be turning around as the HM Treasury recently released its near-finalized draft legislation for crypto asset regulation.
Slutzkin says the draft statutory instrument (SI) “has the potential to change this and make the U.K. a “globally competitive environment for crypto.”
Indeed, the U.K.’s ideas are surprisingly forward-thinking, including proposals for regulating trading, lending and borrowing, staking, intermediation, and decentralized finance (DeFi) platforms.
It’s also worth noting that many of the U.K.’s largest banks have placed restrictions or bans on crypto transactions, blocking customers from investing in highly regulated crypto platforms like Coinbase or Gemini.
Slutzkin views this as “disappointing,” considering that crypto is an increasingly mainstream asset class.
“Much of this stems from a legacy mindset, where a lack of understanding, mistrust and negative associations between crypto and illicit activity have led to a reluctance to get involved in the crypto sector.”
That said, active efforts are being made to show legacy institutions the benefits of bridging TradFi and crypto for both the bank and its customers.
The Gemini exchange was given the green light for U.K. operations in 2020 and has since “worked closely” with the Financial Conduct Authority (FCA), which, Slutzkin notes, has begun to work more positively with the crypto sector.
He notes that Gemini has been proactively engaging global regulators “asking for permission, not forgiveness” and maintains a positive relationship with the FCA.
Regulations Incoming
The European Union’s Markets in Crypto Assets (MiCA) regulations became official in June 2023 and came into force, in their entirety, in December 2024.
Results have been mixed, leading to certain stablecoin issuers like Tether (USDT) exiting the bloc and a disproportionately larger blow to smaller firms. This has resulted in market exits, mergers, and less competition.
According to Slutzkin, the U.K.’s regulations have some “unique advantages” compared to MiCA.
“Firstly, the FCA’s Draft SI rules outline a regulatory framework for staking, which MiCA fails to do,” he explains.
Fascinatingly, the U.K. has excluded “true” DeFi from its regulatory scope for fears of stifling innovation. Conversely, MiCA is likely to be updated with provisions for DeFi in the near future.
“In this regard, we think the U.K. will have a second-mover advantage and learn from some of their drawbacks. It’s vital that the U.K. government rolls out these regulations quickly to remain competitive and doesn’t overcomplicate the compliance processes.”
The U.K. is swarming with “many promising Web3 projects” that are being held back by this uncertain regulatory environment, especially startups and innovators.
Adoption
As crypto becomes more mainstream, major financial institutions are swarming into the markets.
The multi-billion-dollar success of U.S. spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) has proven once and for all that institutional investors are ‘on board’ with crypto.
“The growing wave of institutions entering the market is having a profound impact on crypto adoption more broadly,” Slutzkin adds.
This has seen BlackRock, the institutional behemoth that commands the largest BTC ETF, begin offering crypto investment products to the U.K.
“Many institutional investors are looking to diversify their portfolios and include these on their balance sheets, with BlackRock recommending 2% allocation in portfolios, and Fidelity having published a report saying investors should allocate 1-5%,” he noted.
Then, there’s also the U.S. decision to form a Bitcoin Strategic Reserve, and a separate one for altcoins. This inclusion legitimizes crypto as a core asset class, Slutzkin posits.
The same can’t be said for the U.K., which has said that a Bitcoin reserve would be inappropriate for its market.
“Although the U.S.’ decision to establish a BTC reserve has proven popular, Emma Reynolds, Economic Secretary to the U.K.’s Treasury, recently responded to this question and believes it is not appropriate for our market, so I think it’s unlikely to happen anytime soon, if at all.”
A growing wave of institutional adoption could be a key driver. Looking to Bitcoin Treasury firms like Japan’s Metaplanet, or Strategy in the U.S., a U.K.-based firm following a similar playbook could become a beacon of bullish sentiment for domestic regulators.
“I think that the growing wave of institutional adoption will help to encourage others to follow suit in the U.K., particularly as the regulatory environment becomes more favourable, futures markets expand, and if the U.K. decides to approve further crypto ETPs.”
Future altcoin ETF approvals from U.S. regulators could spur even more confidence in crypto.
“We’re also seeing a large number of investment managers in the U.K. that are looking to allocate a proportion of their portfolios to the crypto space, which is helping to drive further investment. “
Gaining Momentum
The U.K.’s historically prominent role in legacy and modern finance appears to be embedded into its culture, as its citizens are some of the biggest adopters of crypto in the world.
Gemimi’s 2025 report found that roughly 25% of U.K. residents now own crypto in some form, “which was the highest of all the countries surveyed,” he notes.
Slutzkin adds that there’s always been a “general sense of optimism” amongst consumers. Now, with active discussions around the Draft SI crypto legislation, which could be released in 2026, this optimism could finally see some tangible results.
But to “truly” unlock the nation’s potential, regulators need to make attracting global investment via expanded experimental sandboxes to innovate safely.
“The FCA already has a strong track record in this area, but further in-depth support would make a real difference, particularly through practical guidance to help firms navigate and innovate within the regulatory perimeter.”
Next, they need to look beyond regulation and make the U.K. a “genuinely attractive destination for fintechs and crypto innovators.”
This would mean amending “border barriers” such as market access, taxation, and general anti-crypto perceptions.
“If the government moves decisively, listens to the industry, and provides the right environment, the U.K. has a real opportunity to lead on the global stage.”
