As recently as the turn of the present century, over half of financial transactions in the UK were made in cash. Today the proliferation of credit cards, mobile banking as well as cryptocurrency and other innovative digital assets has reduced that to fewer than one in ten.
It is the rapid acceleration in digital technology that threatens to transform the rules governing global financial systems. Naturally, this has also had a profound impact on the explosion in highly aggressive advertising with regulators and governments alike trying at the very least to tame the impact of a fast-growing market that remains largely ungovernable by design.
A 2022 report from the influential Bank of International Settlements concluded that the emerging ecosystem of cryptocurrencies and exchanges was inherently flawed. Partly as a consequence of speculative volatility, but also because technology has not been successfully adopted to provide the alternative monetary system that a younger generation of digitally savvy consumers regard as both inevitable and desirable. Digital currencies in this brave new world should primarily become a store of value and a medium of exchange, rather than being part of an industry whose reputation is tarnished for its wildly fluctuating valuations and abiding concerns as to its use by money launderers and those requiring reliable finance streams for nefarious purposes.
A renewed sense of urgency that ‘something must be done’ in this world came about following the high profile $32bn collapse at the end of that year of the FTX exchange, essentially a crypto financial intermediary. This was accompanied by anxiety that as FTX’s affairs unravelled in a very public series of law suits, the interdependency of many players in the sector would result in contagion with small, retail investors especially vulnerable. Arguably, it was inadequate regulation and historic US government hostility that led to FTX incorporating and operating offshore without proper oversight; worryingly, closer to home the ‘hostile environment’ to the entire crypto industry engendered by the FCA over recent years, has resulted in roadblocks being placed in the way of UK customers who wish lawfully to buy and sell crypto-assets. As a result, leading banks feel obliged to refuse to process payments to or from cryptocurrency exchanges – in essence, the FCA is turning a blind eye to potential consumer harm caused by UK customers accessing product offshore at the same time as it fails to live up to its growth mandate.
Whilst convictions for fraud, criminal conspiracy and regulatory mismanagement proved to be the endgame for FTX’s leading figures, there have been cautionary lessons here for even the most sophisticated technology investors. All too often they have been driven by fear of missing out on potentially huge financial windfalls (a phenomenon also playing out in the related AI investment arena); as a result, many are willing to suspend disbelief when backing charismatic entrepreneurs in a sector whose complexities they fail properly to understand.
Amidst alarm – not to mention some schadenfreude – at the outcome of wild speculation and volatility in the digital assets sphere, it is often forgotten that most of the earliest crypto innovators were driven by libertarian, small state instincts. It was in the immediate aftermath of the 2008 financial crash when policymakers sought to reflate the global economy that the fledgling crypto community set about creating a store of value beyond the grasp of central banks. Some of us recognised at their outset that the mammoth quantitative easing programmes would in time prove to be inflationary; cryptocurrency, with its blockchain technology, was drawn up to enable its holders to by-pass high-taxing governments whose reckless or confiscatory policies were debasing their own fiat currencies. The attentions of global crime syndicates, money launderers and the dark web only followed later.
But how best for governments and regulators to protect consumers without either strangling the cryptocurrency sector under the weight of regulation or, perhaps worse, still confer upon it enough respectability that grievous reputational damage is done to those financial centres brave enough to promote the sector if the house of cards collapses?
Needless to say, as in so many other fields of activity, the second coming of Donald Trump has had all the makings of being a game-changer. Curiously as far as digital assets and crypto was concerned, the first Trump term was characterised by an achingly orthodox reluctance and hesitancy to champion innovation in this field; the incorporation of many leading tech entrepreneurs into his grand coalition in the run-up to his re-election clearly sparked renewed interest in this field.
Last July legislation passed through the US Senate finally establishing a reliable regulatory framework for stablecoins or tokens backed by conventional assets. This is the form of digital currency – as a consequence of being tied to the value of the US dollar – that is widely regarded as being comparatively ‘safe’. If regulated reliably and earning widespread market trust there is every reason to hold out hope that stablecoin will earn its place at the heart of a long-awaited digital development in the international payment systems. The encouragement under Trump of a more permissive approach comes as a contrast to his predecessor whose administration had cracked down hard in the wake of a multitude of crypto scandals and scams on its watch. The US crypto industry regards the recent bipartisan approval over stablecoins as a crucial step forward in legitimising a sector without overly onerous regulation and compliance. This has already resulted in issuers of US dollar stablecoin being amongst the largest purchasers of US Treasury bills.
The contrast with the situation here in the UK is stark. Our monetary regulator, the Bank of England, continues to take a far more censorious approach; regrettably the UK’s central bank now risks choking off our opportunity to lead global competitiveness and innovation in this sphere by its insistence that there should be a strict cap on the amount of stablecoin that individuals and business are permitted to own. In an ideal world sterling-backed stablecoin with deep liquidity should promote fresh demand in UK gilts; such a steady stream of alternative demand in our debt will help underpin the pound as one of the leading global currencies in the digital age.
One of the likely reasons for the reluctance of the Bank of England to embrace new thinking on digital assets more wholeheartedly has been its relatively long-standing support for a central bank digital currency (CBDC). Over 130 countries are actively exploring CBDCs but only a handful have fully launched; whilst London remains an important financial centre for the inter-operability of electronic money, its critics regard the ‘digital pound’ run directly by the state as the very antithesis of the open, competitive financial system that the UK needs for its own future financial welfare outside the EU.
Whereas some of my City of London contacts with expertise in this field have given the digital currency concept a cautious welcome, serious questions remain. Whilst a CBDC may work with the cultural grain of many overseas jurisdictions, there is genuine market concern here that it would pose a risk to ones freedom to transact, a loss of financial privacy and a tangible threat of social control and financial censorship. Small wonder that some vocal UK market participants question the need for creating digital currencies in the first place; surely the proliferation of a wide variety of cryptocurrencies from stablecoins (whose value is tied to existing financial assets) to the digital payments systems already provided by the big global tech players should suffice? National security considerations also loom large; as one leading academic in this field told me, ‘As far as the UK is concerned, a CBDC is a bus that has travelled now that China is so dominant in this asset class.’
Meanwhile, stablecoins are being embraced at pace by consumers and institutions helping to transform global payments and financial infrastructure. This rapid growth is also helping traditional financial institutions bridge the gap with the digital asset community and thereby reduce their reliance on often creaking legacy IT systems. By the end of 2025, stablecoins represented a market of almost $300 billion, currently dominated by US dollar-backed tokens. Yet the UK, with an economy representing 3.5% of global GDP, over 11% of the financial technology sector and responsible for two-fifths of global foreign exchange turnover, is still to introduce a stablecoin policy framework.
The strategic case for the Treasury and Financial Conduct Authority to act is now overwhelming. Stablecoins represent a key tool in reinforcing both monetary sovereignty and sterling’s place in a digital economy increasingly shaped by the US dollar. Alongside this, there is the accelerating worldwide use of the Bitcoin lightning network which provides cheap, fast and secure payments throughout the global south. The City of London’s existing prominence and strength in FX and digital payments also stands to be enhanced; the regulatory clarity provided by an accepted stablecoin framework would also help assuage several macro-financial concerns, not least resolving the opaque supervisory boundaries between the Bank of England and the FCA over digital market participants.
Sceptics will argue that the urgency of current debate over the regulation of digital assets has come about as a consequence of an intense and persuasive US advocacy campaign. In the eyes of its critics this is all reminiscent of the advocacy for over the counter (OTC) derivative product at the turn of the century, and we all remember how that ended. Then, as now, the subtle pitch made by lobbyists was a request that Washington take the lead with approved regulation to reassure the general public of the inherent safety of the product class in which they were about to invest.
However, if the remaining supporters of Web3 (as crypto has recently been rebranded) are right and digital currencies in all their forms still represent the future of the financial world, it is arguably optimal for the UK to embrace the spirit of technological innovation and set itself up as a leading global hub for all this activity. As long ago as 2021, the UK Treasury gave the clearest indication that it sees the innovation within the global digital ecosystem as a crucial post-Brexit opportunity for the City of London.
The Square Mile benefits from one of the most flexible, yet universally trusted, commercial legal systems in the world. In its cross-party proposal to make the City a premier international centre for crypto-assets, the Treasury plans to introduce a ‘crypto market abuse regime’ and envisages in its legislative and regulatory framework a series of secure exchanges with sufficient liquidity to protect consumers against the inherent volatility that comes with digital assets.
As a matter of urgency, the UK now needs to carve out its own distinctive regime of non-equivalence with the EU in financial services – and by extension, fintech – playing to our historic strengths and experience. Using the clout of an established independent central bank to supervise markets with as light a regulatory touch as is commercially prudent and compatible with the development of a world-leading digital trading infrastructure. The US administration’s permissive approach on stablecoin is surely a path UK legislators and regulators would now be wise to follow.
Written on 13 April 2026 by The Rt Hon Mark Field, former Member of Parliament (MP) for Cities of London and Westminster and Consultant at Buchler Phillips, an independent boutique firm with an impeccable Mayfair London heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.