The UK wants to be a global crypto hub, but policy, tax, and risk controls tell a more cautious story. We sat down with Ben Lee, Partner at Andersen UK to unpack where stablecoins, accounting, and regulation are really headed.
Stablecoins, Regulation, and the UK’s Competitiveness Challenge
You criticised the Bank of England’s proposal to cap stablecoin holdings. Beyond the headline risk, what structural problems does this approach reveal about how regulators still view digital assets?
I understand the cautious approach, and to some extent, it’s understandable. We’re at a point now where regulators understand the sector more than they ever have. Originally, the Bank of England proposal around stablecoins included limits — roughly £10,000–£20,000 per individual and £20 million for businesses.
I understand the concern around systemic risk, particularly if everyone in the UK were to operate on a US dollar–backed stablecoin. That concern is valid. The bigger issue, though, is that we’ve never had the infrastructure in the UK to allow founders and builders to properly develop a GBP-backed stablecoin.
We don’t yet have the regulatory environment for it. The FCA and the Bank of England are still trying to work out how that would even function. What’s fascinating is that the recent proposals are framed as temporary restrictions while the system is being built, but at the same time, they assume that a GBP-backed stablecoin could pose systemic risk from day one.
That’s quite unusual. Normally, financial products grow within a regulated environment, build capital, operational resilience, and regulatory relationships, and only later become systemic. Here, we’re effectively saying that a stablecoin would be systemic immediately upon launch. That creates a very high barrier to entry.
If you were looking to launch a GBP-backed stablecoin privately, would that be attractive? I’m not sure it would. And maybe the intention isn’t actually to foster that innovation at all. We’ve been hearing for years about the UK becoming a global crypto hub, but in reality, it feels more like the focus is on providing infrastructure for existing financial institutions, rather than enabling new crypto-native innovation.
It is encouraging that we finally have a proposed regulatory regime for stablecoins. The risks have been identified — redemption failures, liquidity shortages, loss of confidence in digital money. But the framework is lacking on the innovation side. It doesn’t yet create an environment that says, “Let’s build something here. Let’s bring industry into the conversation and do this properly.”
Right now, it feels like it strikes more fear than innovation.
How could such a cap reshape institutional risk appetite for stablecoins not only in the UK, but globally?
When a major jurisdiction like the UK frames stablecoins as something that needs strict caps from the outset, that sends a signal far beyond its borders. Institutions are highly sensitive to regulatory tone.
Even if the cap is presented as temporary, boards and risk committees will interpret it as a warning sign. That can reduce appetite not just for GBP-backed stablecoins, but for stablecoin exposure more broadly, especially when institutions operate across multiple jurisdictions.
The EU is pushing MiCA, and the US is stuck in policy gridlock. Where does this leave the UK — does it risk becoming too cautious to stay competitive?
Historically, the UK has always leaned toward caution. The EU moved relatively quickly with MiCA — and while “quickly” still meant several years, the feedback we’re getting from clients who’ve obtained MiCA licences is generally positive.
There’s clarity and certainty, and that matters. The US, on the other hand, is stuck in policy gridlock, which in theory gives the UK an opportunity.
The question is whether the desire is still there to build something meaningful, particularly around a GBP-backed stablecoin. Had we started this journey three years ago, I’d feel far more optimistic today. The longer it takes, the more innovation simply happens elsewhere.
What would a smarter stablecoin framework look like if the goal were to enable innovation without triggering systemic risk?
It would look much more like how other financial products are regulated. You allow products to develop within a controlled environment, build infrastructure, capital, and governance, and then apply enhanced requirements once they actually become systemic.
That process doesn’t seem to exist yet for stablecoins in the UK.
Crypto Accounting: Where Businesses Still Stumble
In your experience advising Web3 and fintech firms, what are the most common missteps in crypto accounting that end up creating tax or audit pain later?
One of the most common issues is that people still think cryptocurrency is money. It isn’t. People use it like money, particularly stablecoins, but that doesn’t mean it should be accounted for as cash.
You see accountants treating stablecoins as cash on balance sheets because that’s how businesses transact with them. That’s incorrect and causes issues later.
There’s also a lack of understanding of on-chain activity. Businesses often don’t aggregate all relevant on-chain data or fully understand what’s happening at a protocol level. Without that, it’s very difficult to apply the correct accounting treatment.
We also don’t have specific accounting standards for cryptocurrency under UK GAAP or IFRS. Unless a token represents a security, most crypto assets fall into the intangible asset category, which brings its own tax implications.
At a fundamental level, accounting standards were never designed for mass bartering. That’s essentially what crypto transactions are. We’re trying to force them into a system that wasn’t built for this, and it’s clunky.
We regularly see businesses come to us with reports from large firms that don’t match each other. They’re applying the same principles but reaching different outcomes. There often isn’t one clearly “correct” answer.
How did the failures of 2022 expose deeper structural weaknesses in crypto accounting and controls?
In 2022, we acted for several well-known platforms that were heavily featured in the news. In cases like FTX, administrators found there was effectively no discernible financial function.
Some businesses operated omnibus wallets without tracking individual customer balances properly. There were no internal processes to understand ownership or flows of funds. Significant amounts of money couldn’t be traced to anyone.
The question is how businesses reached that size and scale without traditional operational structures, systems, and controls. That’s still the biggest mistake we see, particularly with projects that grow extremely quickly.
Founders build something that takes off overnight, but 12 or 18 months later they haven’t considered financial functions, tax implications, or internal controls. We end up doing a lot of remedial work.
If you want to succeed at scale, you need to operate almost like a publicly listed company — proper records, multisig controls, authorisation procedures, audit trails, and accountability. In this space, especially, you need to be squeaky clean.
Taxation: Clarity in the UK, Complexity Globally
The “crypto tax grey zone” is narrowing but slowly. Which areas still lack clear global tax coordination?
In the UK, we actually have a fairly strong understanding of crypto taxation. Crypto assets are treated as a form of property, and for around 90% of cases, we can determine the tax position for both individuals and businesses.
Businesses rely heavily on how their accounts are prepared, which is why accounting matters so much.
Globally, coordination is the bigger issue. Frameworks like the Crypto-Asset Reporting Framework (CARF), which comes into force for many countries in 2026, will significantly increase the data that tax authorities receive from crypto platforms.
That raises questions around data usage, capability, GDPR, and how this data interacts with existing regimes like CRS and FATCA. Definitions of crypto assets vary between jurisdictions, which makes compliance complex for global platforms.
It will take several years to see how this actually settles.
How does tax uncertainty affect institutional confidence?
A lot of people still think crypto tax is optional, or that on-chain activity can’t be traced. That mindset won’t last.
As reporting frameworks mature, tax authorities will have far more visibility. That will push the industry toward greater compliance, which is ultimately necessary for institutional confidence — even if it’s uncomfortable in the short term.
What would a truly modern digital asset tax framework look like?
Ideally, it would align crypto more closely with existing asset classes. For example, we’ve advocated for something like a crypto ISA in the UK — a tax-free allowance that lets people experiment responsibly.
Crypto being completely tax-free isn’t realistic. Capital gains tax will always apply. But timing matters. In France, for example, tax is generally triggered when crypto is converted to fiat. In the UK, tax can be triggered even if you remain in crypto for years, which erodes your asset base.
I’ve seen cases where people incurred large tax bills without ever having access to the cash to pay them. One client sold Bitcoin in 2018, but couldn’t withdraw funds due to liquidity issues. HMRC treated it as a disposal anyway. That created a cascading tax problem that became almost circular.
A framework that aligns tax payment with liquidity would make far more sense.
Institutions, Enforcement, and the Path to Trust
When institutional investors hesitate, is it mainly about tax, trust, or transparency?
It’s a combination of all three. Public perception still matters. Crypto still carries a reputation problem, even though major institutions — Visa, JP Morgan, Fidelity, Standard Chartered — are already involved.
Four years ago, crypto was widely seen as too risky. Today, adoption is growing, whether through custody, investment exposure, or operational use. That trend will continue.
Clear regulation would accelerate it significantly. If the UK produced comprehensive guidance tomorrow, the landscape would change quickly.
How are traditional accounting firms adapting to crypto-native business models like DAOs or yield protocols?
Not particularly well. A few years ago, only a small percentage of accountants were willing to engage with crypto. That number is growing, but the depth of understanding varies.
We still see basic misinformation, such as claims that crypto is only taxable when converted to fiat. That’s simply incorrect in the UK.
Interest is growing — seminars are full, conferences are packed — but expertise is still uneven.
Looking at enforcement trends, are regulators overcorrecting for the failures of 2022, or is this just natural maturation?
2022 was horrific, but it was also necessary. It forced regulators, governments, and the industry to confront real risks around platforms, controls, and consumer protection.
It escalated regulatory engagement in a way that hadn’t happened before. Nobody wants another 2022, but it did accelerate the building of better infrastructure and understanding.
If we fast-forward to 2026, what does a “trustworthy digital asset jurisdiction” look like — and who’s closest?
It’s a jurisdiction that offers clarity, proportional regulation, and tax systems that reflect how digital assets actually behave. It doesn’t promise zero tax, but it avoids punishing people for volatility or lack of liquidity.
No country has fully nailed it yet. The ones that listen to industry while protecting consumers will be the ones that get closest.
