LONDON, ENGLAND – MAY 29: People pass through the Bank area of the City of London on May 29, 2024 in … More
The UK has a proud history of excellence and innovation in both financial services and in computer science. But its regulatory approach to bitcoin, which sits at the intersection between these disciplines, is undermining that position. The Financial Conduct Authority has created uncertainty, driven businesses offshore, and is damaging the UK’s competitiveness in digital finance.
Regulatory uncertainty, restrictive policies, and a risk-averse approach have put the UK at a disadvantage as institutions elsewhere move forward. While other jurisdictions recognize Bitcoin’s role in institutional finance, UK regulators have created an environment that stifles progress.
The Bitcoin for Institutions event, held recently in London at The Law Society, brought together investors, policymakers, and industry leaders to assess bitcoin’s growing significance. The consensus? The rest of the world is advancing while the UK remains stuck in bureaucratic inaction.
Bitcoin for Institutions at The Law Society.
Allen Farrington, co-founder of Axiom, a bitcoin-native investment firm focused on capital deployment in the bitcoin economy, captured the shift in institutional thinking. He described bitcoin as “forming the basis of a viable institutional asset class.”
However, despite bitcoin being the best-performing asset of the decade, UK institutions remain hesitant. The FCA, tasked with ensuring financial stability, has instead become a barrier to innovation, and the result is that businesses have been driven out of the UK, driven out by regulatory hostility or simply deciding that the cost of compliance with poorly thought-out regulation is too high.
Institutional Hesitation
While the UK stalls, the U.S. moves fast. One message was repeated throughout the event. Ignoring bitcoin is now seen as a career risk.
In the U.S., pension funds, corporate treasuries, and asset managers are integrating bitcoin into their portfolios. In recent months, the largest buyers of bitcoin have not been retail investors or hedge funds, but institutional funds.
Andrew Hohns, founder and CEO of Newmarket Investment Management, described the contrast, “Many U.S. companies have started incorporating bitcoin into their financial planning, and many others are well down the road. In the UK, institutional awareness of the benefits of bitcoin is more nascent, but the topic will move closer to center stage as corporate and sovereign game theory quickly take hold.”
Dominic Frisby summed up the cost of inaction: “Given the potential of bitcoin, and its record, the risk is not so much owning bitcoin as not owning it.”
In dialogue with Izabella Kaminska, Steve Baker, who served as Minister of State in the Cabinet Office until July 2024, commented on U.S. policymakers’ proactive stance, stating, “It’s great that the US is governed by a group of people who understand this.”
In contrast, jurisdictions like the U.S., UAE, and Singapore are attracting capital by implementing frameworks that distinguish between bitcoin and speculative cryptoassets. The FCA has created a framework that treats bitcoin the same as speculative crypto tokens, ignoring its distinct characteristics as a decentralized monetary network.
Adrian Cannon from Musqet pointed out this fundamental mismatch, “Bitcoin is revolutionary in ideas and concepts and that doesn’t fit within regulation and banking.”
The Bureaucratic Maze Blocks Innovation
Beyond the FCA’s misclassification of bitcoin, the UK’s broader regulatory structure is also a barrier to institutional adoption. Baroness Claire Fox, who sits in the House of Lords, told the audience about a recent government initiative called the Regulatory Innovation Office, which was implemented with the intention of reining in regulators. However, the reality is a system of self-replicating bureaucracy, as she described a quango of regulators where no one has accountability.
This structure discourages innovation, shields regulators from scrutiny, and blocks new market entrants, creating a system that protects incumbents while deterring progress. While regulators insist their approach is about protecting investors, the reality is that businesses are being forced offshore, limiting choice and harming competitiveness.
Environmental And Social Impacts
Beyond regulatory concerns, institutional adoption has also been slowed by misconceptions about bitcoin’s environmental impact. Discussions at the event highlighted how bitcoin is being used to stabilize energy grids, reduce waste, and improve sustainability.
One panel on social benefits discussed bitcoin’s growing role in advancing financial inclusion and human rights – and the fintech products being built to enable this. In regions affected by financial repression, bitcoin is being used to bypass restrictions, support activist movements, and provide stable value transfer in fragile economies. In areas with poor access to banking, whether in sub-Saharan Africa, Afghanistan, or refugee communities, bitcoin offers a way to receive donations, store value, and operate independently from centralised financial institutions.
LONDON, ENGLAND – MAY 30: In this photo illustration, a visual representation of Bitcoin in London, … More
Recent data indicates that over 50% of bitcoin mining is now powered by renewable energy sources. Miners are increasingly co-locating with wind, solar, and hydro projects, acting as flexible demand-response partners and absorbing excess energy when supply outpaces demand and powering down during peak consumption to relieve pressure on the grid.
In the UK, this model could deliver substantial savings, especially given that electricity prices here are among the highest in the world. Reducing energy costs could offer a vital boost to both households and businesses facing mounting bills. According to the National Grid ESO, curtailment of wind power alone cost British consumers over £800 million in 2023, as renewable generators were paid to shut down during periods of oversupply, with the tab being picked up by households.
If this curtailed energy were redirected to bitcoin mining, an approach already implemented in parts of the U.S., Scandinavia, and Africa, it would reduce these costs and provide an additional revenue stream for renewable operators. Instead of paying producers to switch off, excess energy could be monetised in real-time, and customers would see immediate savings on their bills.
Bitcoin mining is also being used to capture vented methane from oil fields and repurpose landfill gas into electricity, turning environmental liabilities into economic opportunities. These developments challenge legacy thinking and position bitcoin as an energy solution.
The UK’s Window For Adoption Is Closing
The discussion repeatedly returned to one key issue, namely that the UK is falling behind.
While British firms continue debating whether bitcoin should be included in institutional portfolios, U.S. asset managers and corporate treasurers are already executing their bitcoin strategies. Dominic Frisby captured the financial risk of inaction, “The risk is not owning it.”
At the same time, institutional investors in the U.S. and elsewhere are increasing their exposure. In recent months, institutional funds have been the largest single buyer of bitcoin. This shift was largely due to BlackRock and Fidelity launching U.S.-approved bitcoin ETFs in early 2024, an institutional milestone that the UK has yet to match. What’s more, President Donald Trump signed an executive order in early March 2025 to establish a Strategic Bitcoin Reserve, positioning bitcoin as a strategic asset within the U.S. financial system.
The tension between legacy finance and emerging alternatives was clear throughout the event, which was described as a clash between Wall Street and Main Street. The real risk for the UK is not that bitcoin will fail but that it will succeed elsewhere and leave the UK institutions scrambling to catch up. If the UK wants to remain a serious player in global finance, it needs to adapt before the next wave of innovation settles elsewhere.
Baroness Claire Fox offered a blunt assessment of the current state of affairs and the path to change, “Rebellion is the way forward.”
From Caution To Urgency
The Bitcoin for Institutions event clearly demonstrated an unavoidable truth: that UK institutions must act.
Regulatory paralysis is not stopping bitcoin’s adoption. It is simply pushing progress elsewhere. While the U.S., UAE, and Singapore create supportive policies, the UK remains locked in bureaucratic complexity. Without a course correction, UK financial firms will be left behind in the next phase of institutional finance.
Bitcoin is no longer an emerging trend, it is a financial transformation already in motion. And transformations do not wait for governments and regulators to catch up.
