Britain at Risk of Losing Ground in Fintech and Digital Assets, Experts Warn

Britain at Risk of Losing Ground in Fintech and Digital Assets, Experts Warn

Britain risks losing talented entrepreneurs in the financial technology and digital asset sectors if it does not address key challenges related to regulation and funding, industry leaders told CNBC.

Executives from several firms noted that the local financial regulator has adopted an overly strict approach to registering new companies, while pension funds managing trillions of pounds remain too cautious in financing innovative projects.

Once seen as a leader in promoting competitiveness and innovation, the UK has now shifted towards prioritizing stability to an extent that it is holding back growth, said Jaidev Janardana, CEO of digital bank Zopa.

According to Keith Grose, head of Coinbase’s UK office, “If you get the regulation wrong, you risk driving innovation to other jurisdictions.”

Regions experiencing significant growth include the U.S., Singapore, Hong Kong, and the Middle East, where businesses face fewer barriers and have greater access to capital.

Challenges with Digital Asset Regulation

While the UK has a well-developed fintech sector (featuring companies like Monzo and Revolut), the digital asset industry is struggling due to a lack of clear rules.

Other regions have taken a more proactive approach:

• The EU has implemented the MiCA framework, offering transparency and predictability.
• The U.S. has adopted a more favorable stance toward digital assets.
• Singapore, Hong Kong, and the UAE are advancing reforms to support the industry.

In April, the UK presented draft rules for companies operating in digital assets, but experts say the key lies in how technical issues, especially concerning stablecoins, will be addressed.

Marcus Fairless, CEO of ClearBank, mentioned that the company is prepared to launch its own stablecoin but is awaiting clear regulatory guidance.

Lack of Access to Banking — Another Major Issue

Many firms have struggled to open accounts with traditional banks. According to a survey by Startup Coalition and Global Digital Finance, 50% of digital asset companies in the UK were either denied bank accounts or had existing accounts closed.

Fintech and digital assets remain among the fastest-growing sectors in the global economy. Without addressing these challenges, Britain risks losing its status as a leading financial hub.

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