UK Rules Out National Crypto Reserve, Eyes Sovereign Debt via Blockchain

The UK has made it clear it won’t be following the U.S. in building a national cryptocurrency reserve. Speaking at the Financial Times Digital Asset Summit in London, Emma Reynolds MP, Economic Secretary to the Treasury, stated: “We don't think that's appropriate for our market. We understand that’s what the U.S. is going for, but that’s not the plan for us.”

While the UK is diverging from the U.S. on this front, Reynolds emphasized a broader desire for transatlantic cooperation in the digital assets space: “We think it's really important to have that collaboration and cooperation.”

She referenced recent engagements between UK Chancellor of the Exchequer and U.S. Treasury Secretary Scott Bessent, including the formation of a senior-level UK-U.S. working group. This new regulatory forum is scheduled to meet in June to advance cross-border dialogue on digital asset oversight.

Reynolds noted that U.S. policy on crypto has shifted significantly under the current administration, saying there’s been a “big change from the previous administration” regarding crypto’s regulatory treatment.

While the UK won’t pursue a digital asset reserve, Reynolds revealed that the government is exploring the use of distributed ledger technology (DLT) for issuing sovereign debt. “The procurement process is underway,” she said, adding that the UK hopes to appoint a supplier by late summer.

On the regulatory front, Reynolds clarified that the UK does not plan to replicate the EU’s Markets in Crypto Assets (MiCA) regime. “We decided not to go down that particular road,” she said.
“Our legislative tradition is much less like that of the EU in that we are looking at outcomes.”

Instead, the UK is opting to apply existing financial regulations to digital assets "within the regulatory perimeter that traditional financial services firms operate", Reynolds said. “Essentially we're saying, ‘Same risk, same regulatory approach',” she reiterated.

She also acknowledged the limitations governments face when dealing with decentralized technologies like Bitcoin. “There’s only so much the government can do in that regard,” she admitted. “We understand that some of this stuff is a little bit amorphous, and the decentralized stuff is particularly difficult.”