UK looks to benefit from US crypto alliance
With its emerging digital assets alliance with the US, the UK is positioning itself as a bridgehead for US crypto firms seeking access to Europe, while the US is advancing stablecoins to reinforce the dollar’s dominance in global finance.
The US and UK are expected to formalize a cooperative agreement on cryptocurrencies. According to UK media, Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent met ahead of President Donald Trump’s recent state visit, alongside representatives from crypto companies and major banks.
Table of contents:
- Stablecoins at the heart of the deal
- UK vs. US objectives
- Digital securities sandboxes
- Easing regulatory environment & systemic risk
- Upside scenario
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Stablecoins at the heart of the deal
Stablecoins are reportedly central to the agreement. But what are stablecoins?
Simply put, they are digital assets pegged to a stable reference, typically a fiat currency like the US dollar, designed to maintain a predictable value while enabling fast, borderless transactions. Advocates argue that stablecoins could bring significant benefits, including faster and cheaper payments, greater financial inclusion, and enhanced efficiency in capital markets globally. They could also serve as a bridge between traditional finance and the growing digital asset ecosystem.
Stablecoins are emerging as a bridge between traditional finance and digital assets, offering speed, efficiency, and inclusion.
UK vs. US objectives
The Trump administration’s motivations, particularly regarding stablecoins, are largely strategic. Stablecoins are being actively promoted to reinforce the US dollar’s global dominance, reflecting an “America first” approach.
For the UK, the key objective in pursuing the deal is increased access to US capital markets while attracting greater American investment. British authorities have grown concerned that London-listed companies are increasingly opting to list on the New York Stock Exchange or Nasdaq, where valuations tend to be higher.
With the Trump administration swinging its weight behind the crypto industry, the UK is at risk of being left behind, according to crypto advocates who are hoping for alignment on crypto regulation between the two jurisdictions, and are putting pressure on the UK’s regulatory authorities, notably the Bank of England and the Financial Conduct Authority (FCA). Surveys show that the investing public in the UK is becoming increasingly comfortable with the idea of crypto as a financial asset, and UK financial regulators – notably the Financial Conduct Authority (FCA).
Despite showing greater willingness to accommodate stablecoins, UK regulators have taken a cautious approach, proposing caps on individual holdings between £10,000 and £20,000. Critics argue these measures are costly, impractical, and could hinder broader adoption.
GENIUS Act paves way to widespread tokenization in US capital markets
The US is pushing stablecoins to strengthen the dollar’s global dominance, while the UK seeks greater access to US capital markets but faces pressure to move faster on crypto regulation.
Digital securities sandboxes
Joint initiatives are already underway, including digital securities sandboxes. These sandboxes allow firms to trial blockchain-based financial services under regulatory supervision, mitigating risks while encouraging innovation. The UK’s approach mirrors similar US initiatives, which have permitted limited pilots for blockchain markets and tokenized financial products.
Digital securities sandboxes in the UK and US are enabling blockchain pilots under regulatory oversight, balancing innovation with risk management.
Easing regulatory environment & systemic risk
Alongside these discussions, the UK has, to the dismay of some crypto skeptics, been quietly easing rules on crypto – for example on crypto asset company approvals – as it continues to draft its broader regulatory framework for the asset class. Officials have signaled that the framework will treat crypto with a lighter touch than other financial assets – entailing fewer requirements for senior managers, systems or controls – on the grounds that it currently poses limited systemic risk.
But some observers warn that today’s “innovation space” could be tomorrow’s transmission channel for financial shocks. They see the argument that crypto is too small to pose systemic risk as short-sighted: the more embedded crypto becomes in payments, capital markets, and cross-border finance, the more systemic it becomes. Stablecoins, in particular, are cited as a potential risk vector, since their widespread adoption could amplify shocks across the financial system.
Upside scenario
Let’s conclude with the upside scenario in the event that these risks don’t materialize:
- For the UK, it gets to carve out a valuable role as a bridge between US crypto markets and Europe. For UK policymakers, this would be a win on two fronts: reinforcing London’s global financial standing and tapping into a fast-growing industry.
- For the US, the objective is to promote dollar-backed stablecoins, supporting the greenback’s international pre-eminence while pursuing a somewhat “America first” agenda.
- For the broader crypto sector, the outcome could be greater regulatory clarity, improved market access, and sustained momentum. Stablecoins, in particular, are seen by optimists as a tool to increase efficiency in payments and capital markets globally.
Of course, there’s no guarantee that the upside scenario will materialize.
Intuition Know-How, a premier digital learning solution for finance professionals, has several tutorials relevant to the content of this article:
- Crypto Assets – An Introduction
-
Crypto Regulation – An Introduction
- Financial Authorities (UK): Bank of England
- Financial Authorities (UK): PRA & FCA
- Digital Assets
- Blockchain
- Stablecoins
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