Bitcoin is Infrastructure Now: Why Does the UK Still Regulate It Like a Speculative Risk?
The UK's financial watchdogs are treating the digital backbone of a new economy like a casino chip. It's a costly mismatch in 2026.
The Infrastructure Reality Check
Forget the ticker tape. Major institutions now route international settlements over Bitcoin's rails. Payment giants have integrated its lightning network. It's the plumbing—not just an asset. Yet, across Whitehall, the rulebook still screams 'speculation.' The Financial Conduct Authority's latest proposals treat Bitcoin exchanges with the same suspicion as a high-leverage forex broker. It's regulatory dissonance on a grand scale.
The Compliance Chokehold
This outdated framing creates a tangible drag. UK fintechs building on-chain tools face capital requirements designed for volatile securities, not network protocols. It stifles innovation while traditional finance—always a step behind—gets another free pass to move slowly. The irony? The very rules meant to protect investors are pushing development and talent into jurisdictions with clearer, more progressive frameworks.
A Fork in the Road
The path forward is stark. The UK can continue to lump foundational tech with meme stocks, applying blunt-force risk controls that treat every wallet like a betting slip. Or, it can craft a new category—digital infrastructure—with rules that secure the network without suffocating its utility. One choice cements London as a legacy finance hub. The other allows it to compete for the next era of capital.
The clock is ticking. Every quarter of delay is a venture capital round funded elsewhere, a developer hired in Zurich or Singapore. Regulating 21st-century infrastructure with 20th-century panic is a luxury the UK's financial future can't afford. After all, what's more speculative: a decentralized protocol with a sixteen-year track record, or another government bond propped up by creative accounting?
The “crypto” trap
The UK’s regulatory approach struggles with a category mismatch. Bitcoin continues to be grouped with the broader “crypto” label, meaning rules designed for speculative tokens are applied to decentralized payment software.
The distinction is important. Most “crypto” assets have issuers, governance structures, and marketing designed to generate returns. Bitcoin has none of these. It is an open-source network with no central authority and no promised profit.
Treating a decentralized payment rail like a speculative investment creates unnecessary friction. In the UK, a startup looking to use Bitcoin to settle a micropayment or a loyalty reward faces the same compliance requirements, investor classification tests, and risk disclosures as a high-risk investment product.
This approach makes it challenging to build low-value, high-volume payment applications efficiently, as the compliance costs per transaction can exceed the transaction itself.
Innovation is portable
This rigid approach is already having economic consequences in the UK. While the country debates how to handle “crypto,” other jurisdictions are moving ahead with frameworks that recognize the difference between an asset and a rail.
The European Union’s MiCA regulation creates a clear framework for payment tokens and decentralized assets. The United States is approving Exchange Traded Products and distinguishing between commodities and securities. These frameworks are far from perfect, but they offer something the UK currently lacks: nuance.
For founders, it’s a simple calculation. If you are building payment infrastructure, you go where the rules understand payments. We’re seeing businesses that could be based in the UK instead choose Europe or the US, where regulation is more proportionate. They still follow standard anti-money-laundering and safeguarding rules, but they aren’t treated like high-risk investment products, giving them the freedom to build practical payment solutions.
The economic stakes
Financial and insurance services underpin roughly 8% of the UK’s GDP. The country’s economic strength relies heavily on its reputation as a global hub for financial innovation.
If the future of payments is real-time and internet-native, the UK can’t afford to treat the infrastructure that enables it like a speculative gamble. By regulating Bitcoin the same way as high-risk crypto tokens, the country risks missing out on the next generation of payment networks.
Regulation that matches the risk
Fixing this doesn’t require a complete rewrite of the law. It requires proportionality. In traditional finance, we don’t regulate a coffee purchase with the same scrutiny as a high value stock trade. We scale the rules based on risk, custody, and exposure.
The UK needs to apply that same logic here. If a business is using Bitcoin purely for settlement, and the consumer isn’t holding the asset for speculation, the rules should reflect that. We need a framework that focuses on activity rather than technology.
The tools to make this happen exist, and the talent is ready. But unless the UK updates its definition of Bitcoin, that economic value will simply MOVE elsewhere.
Ben Cousens is CEO of Antidote, a London-based Bitcoin-focused incubator, and Chief Strategy Officer at ZBD, a payments company that uses Bitcoin’s Lightning Network as part of its infrastructure. His views are informed by professional experience in financial technology and payments.
