With the UK Chancellor set to deliver the 2025 Budget, the government faces a defining moment: Beyond the headlines about tax and spending, this Budget carries wider significance for Britain’s long-term competitiveness. To enable the UK to maintain its global financial leadership, it must send a clear signal that it is ready to embrace the economic potential of emerging technologies, especially digital assets and stablecoins. The UK now has an opportunity to demonstrate ambition, provide regulatory clarity, and position itself as a global hub for innovation-driven growth.
The Importance of Digital Assets to Economic Growth
Digital assets present an almost unprecedented opportunity to supercharge our economy. They offer a bridge between traditional finance and the digital economy, bringing the financial system’s ‘plumbing’ into the 21st century.
Take stablecoins, as an example. They allow value to be transferred directly between parties without having to reconcile multiple ledgers. Unlike bank deposits, which can only move between accounts via interbank payment systems, stablecoins can be sent peer-to-peer, more like cash.
This enables 24/7, near-instant, low-cost transfers anywhere in the world. This is what makes stablecoins useful for cross-border payments, where legacy systems remain slow and costly, and for rapidly moving collateral to where it is needed.
Digital technology also lowers the barriers to funding and investment, which could prove particularly attractive to the UK’s SMEs, for whom digital assets could improve access to capital markets and diversify sources of finance. SMEs make up 99% of UK businesses, so any route to helping them do business has a direct correlation to broader economic growth.
Regulation as an Enabler
Unlocking these benefits requires robust and forward-looking regulation.
The UK’s regulatory approach thus far has been cautious. This is understandable, but other markets are moving faster, and the UK risks being left behind.
Regulatory clarity spurs adoption, as we have seen in economies that have embraced digital assets such as the UAE and Singapore. The UK now has a chance to capitalise on “second mover advantage”, learning from these frameworks and other jurisdictions to design a regulatory regime that is agile, open, and internationally competitive.
But speed is of the essence; recent research from Imperial Business School warned that without a clear regulatory framework for stablecoins, the UK risks losing out to faster-moving jurisdictions.
The Budget on 26th November is therefore a critical moment for the Chancellor to declare that the UK will embrace digital assets, and to accelerate progress towards a robust and innovation-friendly regulatory regime.
Sending a Signal to Markets and Regulators
When Rachel Reeves rises to the Dispatch Box on Wednesday, there are three messages that she should deliver.
- Digital assets are a strategic opportunity, not a risk management exercise
Tone matters. Digital assets are not a risk to be managed, but rather a strategic opportunity to seize. The Budget should commit to a level playing field, setting out a principle that legacy barriers (such as tax, collateral eligibility or prudential treatment) should not hold back deployment of digital technology. The UK also needs a strategy to support stablecoins in the UK.
2. Regulatory clarity is a priority
The Budget is an opportunity for the Government to set out an ambitious timeline for finalising regulation of stablecoins and digital assets. Not only will this offer the clarity the sector has long requested, but will also help drive adoption. But regulation also needs to be proportionate, recognising the emerging nature of this technology.
3. Regulation needs to be internationally coordinated
The UK hosts a preeminent global financial centre, and continued international alignment and cooperation is critical to maintaining this position. The UK has already taken the lead here with the US-UK Task Force on Markets of the Future. This has the potential to reduce friction for cross-border activity, and give institutions the confidence to invest in digital asset solutions at scale.
An opportunity to be seized
The Budget on 26th November provides the Chancellor with an opportunity to ensure that the UK has the building blocks in place to secure its role as a global digital assets and innovation hub.
By taking the measures outlined above, she would strike a balance between prudence and innovation, and position the UK to harness stablecoins and other digital assets for economic growth.
Failing to send that signal risks losing momentum at a time when global competitors are already pressing ahead.
