Responding to the UK's evolving Virtual Asset Framework

As virtual assets become increasingly embedded in the financial system, the policy challenge is no longer whether to regulate, but how to do so effectively while simultaneously enabling innovation. As use of virtual assets and related technologies advances, so too will regulation.

A spectrum of approaches is emerging, from the caution of the EU to a more liberal attitude in the US. In this landscape, the UK faces an acute challenge. On one hand, the government has expressed ambitions to position UK as a ‘global hub’ for the crypto industry. On the other hand, preparations for the UK’s Financial Action Task Force (FATF) assessment in 2027 will require the UK to demonstrate effectiveness of supervision, enforcement, and international cooperation, which may lead to a suppression of ambition.

This roundtable will bring together industry experts, and private sector and government representatives to examine the UK’s evolving approach to virtual asset regulation. The discussion will focus on the threat landscape, regulatory effectiveness, international alignment, and the UK’s positioning as a centre for financial innovation.

The discussion will be held under the Chatham House rule and captured via AI transcription. A written output summarising the findings of the workshop will be produced.

Roundtable Objectives:

The discussion will be structured around the following themes:

1. Threat assessment: Evolving risks in the UK

The UK’s National Risk Assessment 2025 underlines a shift in the risk landscape. Money laundering via cryptoassets has increased since 2020 and is now assessed as high risk, while the risk of registered cryptoasset firms being misused for terrorist financing has grown but remains medium risk.

Key questions:

How have risks evolved considering the role of centralised exchanges, OTC/brokerage and P2P markets, and DeFi and mixing services?
What are the most important stablecoin-related risks from a UK perspective?

2. Regulatory effectiveness

While the UK has signalled political ambition to become a crypto and digital asset hub, firms continue to report friction in supervision and implementation.

Key questions:

Where does the disconnect between political messaging and supervisory practice arise?
What specific changes (in rules, guidance, engagement processes or resourcing) would most improve regulatory predictability?

3. Global context: Fragmentation or Alignment?

The international regulatory landscape for virtual assets remains fragmented, with different approaches in the UK, EU and US.

Key questions:

Where does the UK’s approach deliver advantages over EU’s MiCA, or US’s SEC/CFTC-led model? Where does it create competitive disadvantage or uncertainty?
Is transatlantic / trans-Channel alignment achievable or even desirable, and on which dimensions?

4.UK as the innovator

The UK is a leading global financial centre with strong capital markets and a mature regulatory architecture.

Key questions:

How should the UK leverage its financial-centre strength to lead in tokenised finance? How does the UK regain its position as a global financial innovator?
What policy and supervisory choices need to be pushed forward for the UK to support responsible innovation in digital assets.