On 5 March 2025, we hosted a seminar with panellists Rob Kellar KC, Rita Martins and Lisa McClory for an energetic and enlightening discussion on the recent and ongoing changes to the digital assets sector in the US. Here, we’ll explore the key themes and what they could mean for the future of the UK’s digital assets sector.
Extraordinary pace of change in the US
There has been a flurry of activity in the digital assets sector in the US since President Trump was inaugurated. The new Government is signalling a clear change in direction by embracing digital assets.
- On 21 January, the day after Trump’s inauguration, the Securities and Exchange Commission (SEC) announced the formation of a new Crypto Task Force to spearhead the development of a clear regulatory framework, led by commissioner Hester Peirce. Peirce is known for her well-documented dissent against SEC enforcement on crypto firms, which was the strategy followed by the former head of the SEC, Gary Gensler.
- On 23 January, Trump signed an executive order establishing policy to support responsible growth and use of digital assets. The same day, the SEC also rescinded SAB 121, which removed the requirement for US institutions holding crypto on behalf of customers to report it as a liability. This is expected to incentivise firms to act as custodians for digital assets and provide significant new opportunities for expansion. For example, State Street, the global second largest custodian, has since announced it will renew its activity in crypto custody. Citi, the global fourth largest custodian, is planning to enter the crypto custody market.
- On 4 March, a national strategic cryptocurrency reserve was announced, including five different digital currencies.
Our panel noted that with the Republican party controlling both chambers of Congress, there’s renewed momentum for crypto-friendly legislation – for example, the Financial Innovation and Technology for the 21st Century Act, FIT21 – as as the US aims to become ‘the crypto capital of the world’.
These developments are a catalyst for significant innovation and investment into this sector in the US, which asks the question: can the UK compete and still fulfil its ambition to become a global digital assets hub?
Progress in the UK is slow by comparison
There’s increasing concern from market participants that that the approach to digital assets regulation in the UK is too slow and doesn’t give firms the clarity they need. Critics argue it may not currently strike the right balance between consumer protection and innovation.
While the UK has made progress – for example, with the consultation on financial services regulatory regime for cryptoassets – there's still a long way to go. According the FCA’s Crypto Roadmap, all policy statements and final rules, including those on the regulation of stablecoins, are not expected to be published until Q1 2026, making it likely that the regime will not go live until late 2026 or 2027.
To demonstrate the challenges faced by UK firms, our panel highlighted the FCA’s cryptoasset financial promotions regime. Currently, it is difficult in practice for firms to register under the money laundering regulations (MLR) to be able to promote their crypto services. As a result, many firms in this sector are choosing not to market to UK consumers at all, instead establishing outside the UK and geo-block.
Risk that digital assets firms could migrate to the US
With the current momentum across the Atlantic, there’s a risk that UK businesses and start-ups could migrate towards the US.
A high-profile example is Andreessen Horowitz (a16z), a venture capital firm. The UK government spent five years successfully lobbying the firm to choose London as its first overseas base, only for the office to close within 18 months of its opening in favour of focussing on the US crypto market.
With the US having such a large potential market, and with an apparent 180-degree shift in attitude and appetite for crypto, it’s understandable why firms are being drawn across the Atlantic.
Our panel agreed that in the short term, there may well be a digital assets ‘brain drain’. However, this trend could be reversed in the longer term – but only if the UK is able to implement a proportionate and accessible regime.
Reasons to be optimistic about the UK’s digital assets sector
The activity and rhetoric coming from the US should not eclipse the UK’s extensive preparation work on digital asset regulation. Until the recent changes in the US, the UK regulatory position was more advanced than the US.
1. World-leading judiciary and flexible common law
A key advantage for the UK that often goes under-recognised is English law. The clarity, flexibility and stability that this jurisdiction provides, aided by a world leading, independent judiciary and mature dispute resolution processes, means that English law is used extensively internationally as the basis for protocols and token purchase agreements.
As more complex tech disputes in the digital assets sector arise, the value of this will only increase through the continuous building of precedent and legal expertise.
While the US currently has momentum, being a trusted jurisdiction puts the UK in a competitive position when digital assets firms are deciding where to establish themselves in the longer term.
The value of the flexibility and forward-looking nature of English law should not be under-estimated as a core strength of the digital assets industry in the UK.
2. An active and forward-looking Law Commission
The extensive work of the Law Commission has been instrumental in forging the flexibility and forward-looking reputation of English law in digital assets.
For example, the Law Commission confirmed that digital assets can constitute ‘property’ despite not being a ‘thing in possession’ nor a ‘thing in action’. This legal certainty allows digital assets to fit into existing frameworks – for example, insolvency processes or laws around succession – and paves the way for more mature use cases, such as their use as collateral or real-world asset tokenisation.
The Law Commission continues to provide clarity on various issues – for example, what should happen when parties to a legal dispute concerning crypto are based in different countries. Through our position on the board of the Crypto Fraud and Asset Recovery network (CFAAR), we contributed to the Law Commission’s consultation on digital assets in insolvency and presented at the launch event.
te the emergence of decentralised autonomous organisations (DAOs).
3. Government leaning in to digital assets
The UK Government is increasingly demonstrating its ambition for the country to become a digital assets hub.
For example, the Digital Securities Sandbox (DSS) was launched in September 2024 by the Bank of England (BoE) and the FCA to explore how new technologies, such as distributed ledger technology (DLT), can be used by firms to issue, trade and settle traditional securities like share or bonds. Under the DSS, firms operate under modified regulations to allow them to experiment with new products and technology. The DSS is currently due to run until 2029, although this may be extended.
The UK’s commitment was further illustrated when the Chancellor announced in November 2024 that the Government would issue a digital gilt instrument, known as ‘DIGIT’, within the DSS.
In January 2025, HM Treasury amended the law to exclude cryptocurrency staking from the definition of a collective investment scheme. This is another good example of how the UK is hoping to be at the forefront of developments in the sector.
4. UK well placed to benefit from RWA tokenisation
While much media attention is focused on cryptocurrencies, our panel agreed that one of the biggest opportunities for global markets is using DLT for the tokenisation of real-world assets (RWAs). Benefits of this include:
- faster and cheaper ‘post-trade’ processes
- increased liquidity enabled by fractional ownership
- the democratisation of access for smaller investors
- composability (tokens can be used as collateral in DeFi)
The UK is uniquely set up to facilitate the ‘tokenisation of things’, with the UK Jurisdiction Taskforce (UKJT) producing a report showing how common law could “readily accommodate” tokenisation of RWAs.
The UK’s commitment to harnessing this opportunity has been demonstrated by an Asset Management Taskforce composed of representatives from industry, HM Treasury, and the FCA. Two reports have been published which expand on the potential use cases of fund tokenisation. Issued in 2024, the latest report looks at the use of tokens as collateral for money market funds, and the role tokenised funds play in a fully ‘on chain’ investment market that will streamline back-office functionality.
5. Extensive talent pools
There is a huge demand for high quality talent from companies in the digital assets sector. The UK’s status as global fintech hub, together with longstanding strengths in financial and professional services, means that we have one of the biggest talent pools that can be leveraged for digital assets.
What’s next?
Our panel agreed that it’s vital the UK moves at pace and strikes the right balance between regulation and innovation, with regulation being proportionate to the opportunity available.
The UK has a reputation of leadership in financial innovation, and we must not pass up on the opportunity to capitalise on our advantages.
For more information or advice, contact Carmel King, Chris Laverty or Russell Simpson.
With thanks to Rob Kellar KC, Rita Martins and Lisa McClory.
