'Dubai Is Trying To Steal Our Lunch,' Says UK Tory Spokesperson

In an interview with Sandmark, Garnier made the point that crypto assets, stablecoins and Distributed Ledger Technology (DLT), while connected, are fundamentally different and should not be regulated in the same way.

The danger, he suggests, is that policymakers continue treating digital assets, payment systems and financial infrastructure as the same thing. If they do, the UK could find itself regulating yesterday's categories while the rest of the world builds tomorrow's financial systems.

How UK regulation is taking shape

His comments come as the UK continues to develop its cryptoasset regulatory regime, with the Financial Conduct Authority (FCA) taking on expanded responsibilities for the sector.

The FCA's broad aim is to treat digital assets similarly to traditional finance. Key regulatory areas include financial resilience requirements, covering capital adequacy and stress testing, and new market integrity rules addressing insider trading and market manipulation. Stablecoins will also be subject to clear and transparent standards.

Why the UK risks falling behind

The new frameworks are seeking to capture everything from Bitcoin and Ethereum to stablecoins and tokenized securities. According to Garnier, treating these assets as a single category risks creating rules that fit none of them particularly well.

This has the potential of undermining the UK's ambitions to become a global digital assets hub, he said.

He made the point that the City of London's role as a finance hub is built on centuries of innovation, but now rival jurisdictions are moving more aggressively. For Garnier, the debate is about whether the UK develops a sufficiently sophisticated regulatory framework to remain competitive as that transformation unfolds.

"In 20 years' time, we will be using DLT for everything," he said. "What will have changed is who is leading in fintech and financial services. And Dubai is trying to steal our lunch."

The same point was recently made by Joey Garcia, executive director, chief strategy, policy and regulatory affairs officer at Xapo Bank, a Gibraltar-based digital banking platform offering crypto services. At an event in the House of Lords in May, attended by Sandmark, he said the UK's track record in building trusted financial markets gave it an advantage, but warned that an opportunity could quickly be lost. He projected an 18-month window before the UK risks falling behind other jurisdictions.

Why one size doesn't fit all assets

For Garnier, one of the biggest misconceptions in policymaking is the tendency to view all digital assets as forms of money.

"BTC and crypto assets are not currencies and can't really be used for moving money," he said.

"If you want to believe a non-existent thing has a value, that's fine," he said, but stablecoins should be considered as payment mechanisms.

Nevertheless, Garnier believes DLT presents the greatest opportunity, with the potential to transform the ownership and administration of real-world assets.

One example is shareholder voting. Today, the process can involve multiple intermediaries and significant delays. A share register maintained on a blockchain-based system could allow investors to buy shares and exercise voting rights almost immediately.

"A share register on DLT means you can buy shares and vote at a shareholder meeting 30 seconds later," he said. "That has the potential to give shareholders more influence."

Property ownership could be transformed similarly. According to Garnier, blockchain-based property registers could increase transparency, speed up transactions and enable fractional ownership. This would enable smaller investors to gain exposure to property assets and potentially help more people onto the property ladder.

Reform wants to go further, and faster

While Garnier thinks the current regime needs reshaping, he is not suggesting significant change.

Reform UK, the populist party, has, however, proposed more radical policies with the aim of positioning Britain as a global hub for digital assets and blockchain innovation. These include cutting crypto capital gains tax to 10%, creating a UK Bitcoin reserve, allowing tax payments in cryptocurrency and preventing banks from debanking lawful crypto users.

However, the policy was removed from the party's website at the end of May, amid the funding controversy that later led Reform leader Nigel Farage to resign as MP for Clacton over an undeclared £5mn gift from a Tether investor. Reform UK has not responded to Sandmark's request for comment.