Crypto comes to its critical juncture – will the UK help to lead or lag behind?

Following Trump’s inauguration in January, developments in the digital assets sector have been gathering pace rapidly. 

The first few months of a busy year have witnessed some major market moves, with US crypto exchange Coinbase, now part of the S&P 500 index, agreeing to buy Dubai’s Deribit for $2.9 billion in the digital asset market’s largest deal to date. Another deal worth watching closely is brokerage Cantor Fitzgerald’s partnership with SoftBank, Tether and Bitfinex to create a multibillion-dollar bitcoin acquisition vehicle. 

The new vehicle, 21 Capital, is expected to receive around $3.6 billion in bitcoin from its crypto partners to offer investors a singular vehicle for bitcoin exposure. The new venture could launch with more than 42,000 bitcoin, making it one of the largest bitcoin treasuries in the world, and proof that both Wall Street and ‘Main Street’ are going to have crypto firmly embedded within them moving forward. 

The deal underlines Trump’s commitment to becoming the ‘crypto president’, and the one who will popularise its mainstream use. He says he backs crypto because it can improve the banking system and increase the dominance of the US dollar, and it’s no coincidence that Howard Lutnick, who was the CEO of Cantor for 40 years, is now running Trump’s commerce department. 

In line with other recent deals, such as Kraken’s acquisition of retail futures trading platform NinjaTrader and Ripple’s purchase of broker Hidden Road, it’s the fintech and crypto crowd at the wheel in some of these reverse acquisitions. It also looks likely that Tether will be the majority owner of 21 Capital, and Jack Mallers of Strike, who has already made Strike into a bitcoin business, will be the CEO. 

What we’re witnessing is the convergence of TradFi and DeFi that will reshape financial services. And the message to incumbents is clear: adapt to these trends or one day soon you won’t just be deal counterparties, it will be the Tethers and Jack Mallers of the world eating your lunch.

The regulatory wheels are in motion

These deals are the clearest sign yet that digital assets are becoming increasingly woven into the institutional fabric, and one the UK can’t ignore if it genuinely harbours its own ambitions of becoming a crypto hub. Investors are being lured across the pond and it’s crucial to act now to avoid being left behind. 

Against this backdrop, the UK has been conspicuously lacking in the deals done, the positive announcements, and the product and institutional movement seen in the US – and even in the European Union (EU). 

The Chancellor’s recent speech at the Innovate Finance Global Summit 2025 revealed plans to provide some fresh impetus and develop a comprehensive regulatory regime for cryptoassets. Reeves has also spoken about the intention to deepen regulatory cooperation with the US amidst talk of a transatlantic sandbox for digital securities as the UK looks to align itself more closely with the crypto frontrunner.  

The direction of UK regulatory travel is now clear: crypto activity will be brought into the scope of regulated activities under amendments to the Financial Services and Markets Act, with HM Treasury having published - and welcomed consultative input on - a draft statutory instrument setting out the new provisions. This includes definitions for qualifying cryptoassets and stablecoins as well as the activities that will be classed as regulated activities.  

It means the UK is pursuing a regulatory model more similar to the US approach of expanding the perimeters of existing financial services legislation rather than the EU’s sector-specific approach in the shape of its Markets in Crypto-Assets Regulation (MiCA). 

This will also be a sea change for crypto businesses operating in the UK. It takes them from the current point A, where supervisory oversight is based on anti-money laundering compliance and crypto asset financial promotions rules, to future point B, where crypto asset business activities themselves are fully regulated and authorised.

Compliance through collaboration 

The Financial Conduct Authority (FCA), which has noted the crypto sector’s potential to drive economic growth, is now working through its crypto roadmap to create a framework that balances consumer protection with room for innovation to breathe.  

By opening consultations with the sector through a series of discussion papers, the regulator has shown its willingness to work in tandem to achieve all stakeholders’ shared goals. 

The new framework must be proportionate to the risk posed, with appropriate differentiation of business sizes, investor classes and cryptoasset typologies. With crypto now part of the institutional fabric, there is also a need to find the right balance for retail investors, ensuring they’re protected without restricting their freedom. 

It’s also important to note, overseas crypto platforms serving UK consumers will need some form of regulated UK presence in the future, whereas previously these businesses didn’t require any regulatory registration on our shores.

They will need to consider their UK compliance and regulatory strategy if they wish to continue reaching their British customers, and this is an important step in setting up our sector for long-term, sustainable growth. At Zumo, we’re partnering with these businesses to help them access the UK market responsibly and with compliance in mind. 

The financial world is changing fast, and there are new opportunities on offer for fintechs and the customers they serve. The UK must now lay the foundations that will help it to match its rhetoric with a new reality, and ensure it doesn’t write itself out of the global crypto script.

Close collaboration will be the key to success.